Dallas Police and Fire Pension Board Moves Forward with City Proposal

In a significant development, the Dallas Police and Fire Pension Board agreed on Thursday to accept the city’s proposal from September 26 and advance toward a resolution between both parties.

However, this approval isn’t without conditions. It hinges on the “acceptable finalization and negotiation” by both the city and the pension board, as stated by Rob Walters, a Board member appointed by the Mayor, who has been part of the ongoing negotiations for several months.

The board’s decision was made with a narrow vote of 6-5. As of now, the details of the agreement are not publicly available.

David Kelley, another appointee of the Mayor, shared a sense of optimism, stating, “There is room for resolution here, but we are excited about the prospect of a settlement.” He added that eventually, the board will need to review and consider whatever agreement is reached, hoping to create a solution beneficial for everyone involved.

A potential settlement could ease the long-standing tensions that have existed since 2017, when the pension system faced a crisis due to risky investments and management issues from the previous board, which lacked adequate financial expertise.

City Manager Kimberly Bizer Tolbert remarked that the vote represents “a step in the right direction” for all involved. She highlighted that the Pension Commission’s approval signifies meaningful progress toward a sustainable and fair future for the pension system, while providing clarity for the city’s long-term financial outlook.

Vice Mayor Pro Tem Gay Donnell Willis supported Tolbert’s sentiments, mentioning that taxpayers are set to contribute over $220 million this year. She stressed that the primary focus now should be on optimizing financial outcomes for retirees and active first responders. Councilman Chad West expressed his excitement in a newsletter, noting that the board accepted “the city’s best and final” offer, reflecting positively on the week for Dallas.

Ongoing Legal Disputes

While negotiations have been in process for some time, relations soured after the pension system initiated a lawsuit against the city over who would have the final say in addressing a $3 billion funding deficit.

Last year, the Travis County District Court favored the pension plan, prompting the city to appeal the ruling.

Pension leaders argued that legislative actions taken to rescue the plan in 2017 granted the board exclusive authority to approve financial plans as long as they satisfy state regulations, but the city contested this authority and pursued other measures. According to state law, if funding for the pension system exceeds a 30-year period, a joint plan must be developed by both the city and the fund.

The city described the pension system’s position as “extreme,” warning that it could set a dangerous precedent, allowing pension plans statewide to request city funding without the city’s involvement in decision-making.

During the recent legislative session, State Senator Royce West proposed a bill aimed at codifying the city’s plan and stopping the ongoing lawsuit. While the Senate advanced the bill, it ultimately stalled in the House and failed to progress.

Last month, the City Council approved an additional allocation of $500,000 as the legal battle drags on. Oral arguments were recently presented in the 8th Circuit Court of Appeals in El Paso.

Future Financial Planning

Pension and city officials are exploring how swiftly the city can allocate an “actuarially determined” amount to meet benefits and settle unpaid costs, aiming to ensure full funding within 30 years.

City officials have made it clear that their budget has been structured around pension payments, cautioning that this plan might increase financial strain and lead to service cuts.

Last year, they initiated a five-year program to inject $11.2 billion over 30 years while also calling for improved oversight of pension investment choices to prevent past mistakes from reoccurring.

Ultimately, it falls on the taxpayers to shoulder these costs.

Meanwhile, the pension board approved a separate three-year plan expected to cost the city an additional $400 million. The pension system aims to implement cost-of-living adjustments (COLA) for its members as quickly as possible—offering retirees a partial COLA based on inflation and funding levels.

For example, if inflation rises by 2% and the fund’s state is at 40%, retirees can expect a 0.8% increase in their benefits, but this increment cannot exceed 1.5%.

Per state legislation, COLAs can only be distributed to beneficiaries once the fund is 70% filled. As of March, the funding level was at 32%.