Dallas Police and Fire Pension System in financial trouble once again

DALLAS – The Dallas Police and Fire Pension System is once again in need of financial help.

It is asking for a significant amount of money from the city of Dallas. Right now, city leaders don’t know where they’re going to get that money.

The Dallas Police and Fire Pension System is still reeling from years of bad management under a previous board. 

It’s important to remember this is the financial lifeline for 10,000 Dallas police and firefighters.

When Kelly Gottschalk took the reins of the Dallas Police and Fire Pension System seven years ago, it was set to be insolvent this year. 

Fortunately, thanks to a massive overhaul involving benefit cuts, increased funding from the city and state legislation, the fund has been saved. 

But Gottschalk explained to city council members that the fund is still in a deep hole due to the previous board’s risky real estate decisions and other investments made from 2005-2008.

“We are doing our best to get out of them,” she said. “I don’t know what the thinking was at that time.”

At this rate, retirees will not be able to get a cost-of-living adjustment, or COLA, for 51 years. 

The pension’s unfunded liability is $3 billion, and the fund will soon be in violation of state law if the city does not do more. 

“The state requires under 30 years to fund, projecting 68 years, more than double the requirement,” Gottschalk said.

At this rate, the pension will not be funded until the year 2090. But in just two years, the state will require full funding much sooner by 2055.

Gottschalk says in her opinion there is no more room to cut benefits that already happened in 2017.

“One billion in liability cut overnight,” she said.

Any more cuts to benefits, Gottschalk says the pension would no longer be worth what police officers and firefighters pay into it.

“Any solution will require a substantial amount from the city,” she said.

Gottschalk says any solution is complicated.

According to the presentation, to comply with the state’s requirements, the city needs to increase its contribution by 35%. For 2021, that amount would equal $58 million.