After it looked like an agreement might never happen, the Dallas Police and Fire Pension System has signed off on a proposed bill to help fix the ailing system.
The “landmark negotiations and agreement help secure the long-term solvency and stability of the Dallas Police and Fire Pension System,” said Police & Fire Pension System Board Chairman Sam Friar in a statement.
The agreement includes a reduction to benefits, and the creation of a new retirement plan. Additionally, it calls for contribution increases from participants, and decreases to Dallas’ contribution rates. It also restricts the city’s minimum payment for the first five years, while another minimum payment will take effect for the two years after. Beyond that, the city will have a contribution rate based on 34.5% of payroll, minus overtime.
“Important amendments negotiated today secure solid, long-term funding, and guarantee that the future pension board ‘shall’ ensure that the plan is actuarially sound,” said Friar. “It’s truly a great outcome considering where we were with the potential of having no retirement for our police and firefighters.”
However, just a few days before the agreement, the Dallas Police and Fire Pension System opposed the substitute bill, saying it was only a short-term fix. But then Texas Sens. Royce West and Don Huffines announced amendments to a Senate substitute proposal, which alters the original bill from the House (HB 3158).
The fund was expected to become insolvent by 2030.
The current proposed bill, which still requires votes from the full Texas Senate and House, requires a $13 million lump sum payment from the city for each of the first five years. The contribution rates during the sixth and seventh years will be determined based on the Dallas’ hiring plan. And before July 1, 2024, the city must use a third-party actuary to determine the fund’s progress, which could lead to changes to the minimum contribution rates by the city and system members as well as the lump sum amounts.
Both sides made concessions to help get the deal done. The pension participants will end up paying more while receiving less in benefits. Taxpayers will also pay more, but how much more is not yet known. And the state Senate granted the city six of the 11 members on a new Police and Fire Pension Board, and any major benefit changes proposed by the senate must now be agreed on by two-thirds of the pension trustees.
“We especially commend our dedicated first responders for their willingness to cut their benefits significantly in order to continue working for the citizens of Dallas,” said Friar. “More than 75% of the bill’s financial fix falls upon the backs of our 10,000 Dallas first responders and family members.”
Tags: Dallas, Dallas Police and Fire Pension System, Sam Friar