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The Dallas police and fire pension fund is short $3 billion

This file photo made Thursday, Dec. 8, 2016, shows the gallery during a Dallas Police & Fire Pension System board of trustees meet in Dallas.
LM Otero
AP Photo
This file photo made Thursday, Dec. 8, 2016, shows the gallery during a Dallas Police & Fire Pension System board of trustees meet in Dallas.

The Dallas Police and Fire Pension System Fund is facing a $3 billion unfunded liability, city officials were told this week.

City council members learned on Tuesday that a 2017 legislative plan to solve decades-long problems with the fund was not as successful as the city hoped. As it stands, the pension fund — which provides retirement, death and disability benefits to Dallas police and fire rescue employees — won’t be fully funded for another 68 years if nothing changes, according to a presentation to the council's Government Performance and Financial Management Committee.

"Any viable solution is going to require a substantial amount of money from the city,” Pension fund Executive Director Kelly Gottschalk told the committee.

In 2017, the Texas Legislature passed House Bill 3158, overhauling the Dallas pension system. The bill cut active police and fire rescue employees’ benefits and required them to pay more into the fund out of their paychecks. HB 3158 also limited future benefit increases for retirees, required Dallas taxpayers to pay more toward the fund, and created a new governance system that gives representatives from the city and unions a seat at the table.

Gottschalk told council members that, right now, too few public safety employees pay into the fund. On top of that, investments have performed below expectations over the past few years because of fluctuations in the stock market as a result of the COVID-19 pandemic.

Benefit cuts, employee contribution increases or investment returns aren't enough to fix the shortfall, Gottschalk said.

“If you increase the contribution rate or you lower their benefits, there's not a lot of room there,” she said. “They might be in a position of paying more for their pension than it's worth … and then it's just not possible to invest our way out of it.”

As of Wednesday, a meeting has yet to be scheduled to discuss changes and improvements to the fund. But Gottschalk did note that Dallas Mayor Eric Johnson has formed a exploratory committee to look at funding solutions.

Under state law, Dallas has to finalize a plan to keep the fund from going broke by 2025.

While Tuesday's presentation outlined many of the issues facing the fund, it failed to list recommendations on how to solve the problem. A question about fund recommendations led to a short back-and-forth between Councilmember Adam Bazaldua and committee Chair Cara Mendelsohn, who stressed the meeting was meant to provide information.

“We’re really not looking to talk about solutions," Mendelsohn said. "We’re trying to understand the facts and have all the data.”

But a lack of a plan to fix the funding gap led to frustration for some committee members.

"How can we have a briefing that we're not talking about solutions?" said District 8 Councilmember Tennell Atkins, who previously served on the pension system's board of trustees.

"Solutions are something that you determine once you fully understand an issue," Mendehlson responded. "I think that it would be fair to say that most of us don't have a deep enough knowledge at this point to be talking about solutions."

Rebekah Morr is KERA's All Things Considered newscaster and producer. She came to KERA from NPR headquarters in Washington, D.C., where she worked as a news assistant at Weekend All Things Considered.