A Day of Action in Austin Heralds Arrival of Pension Reform

Dallas Mayor Mike Rawlings spoke at the Dallas Police Department's 2017 memorial service Wednesday.
Dallas Mayor Mike Rawlings spoke at the Dallas Police Department's 2017 memorial service Wednesday.
Brian Maschino
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Reform to the Dallas Police and Fire Pension system is taking shape after a day of negotiations, mutual agreement and statehouse votes.

On Thursday afternoon, Dallas police and fire associations agreed to a deal with the system and the city of Dallas. After that, the Texas Senate's State Affairs Committee unanimously voiced its support for the compromise, which will give the city of Dallas six seats on the 11-member fund board while requiring two-thirds approval to make any significant changes to benefit levels.

The bill to address the floundering fund moves to full Senate, which is expected to support the compromise, next week.

"It's important that we live up to our common image of Dallas," state Sen. Don Huffines said Thursday afternoon. "Keeping our city a place where big dreams are possible and people come first. The men and women of Dallas police and fire must be secure in their future."

Huffines said he didn't get everything he wanted in the compromise, but that's "a hallmark of a successful negotiation," he said. He and Royce West, another Dallas-based state senator, negotiated the compromise for the city, the fund and Dallas' police and fire associations.

All parties involved are giving up things they feel are valuable in order to shore up the fund, which could have gone belly up in a decade.

For the city, the deal means paying more into the fund for longer than Dallas Mayor Mike Rawlings would've liked. The city will pay a steadily rising contribution into the fund for at least the next seven years, with a payment floor based on assumed additions to Dallas' police force, whether the city added those officers or not. In 2024, the city will have its annual payments limited to 34.5 percent of annual police salaries, not counting overtime, with no minimum payments, if the fund meets financial benchmarks and proves it is on its way to solvency.

Kelly Gottschalk, the Dallas Police and Fire Pension Fund's director, said Thursday that without those benchmarks, she viewed the Senate bill as a "seven-year fix." She is hopeful that the bill will accomplish its stated purpose in funding the pension system in 46 years.

In return for giving the fund increased financial security, the city and Rawlings get what they've wanted most throughout the process — control of the board. The city, Rawlings argues, now has the ability to stop a rogue administrator like the DPFP's former boss, Richard Tettamant, who both sides agree imperiled the fund with risky real estate investments. Despite being "100 percent happy" that the long fight over the bill is over, Rawlings said Thursday that there is still work to be done.

"This is the beginning of a big effort. There's a lot of other things we have to do," Rawlings said. "We've got to solve this pension fund where it can be solvent in the coming years. We've got to attract and retain our police and our fire if we want to continue growing. Dallas is going to grow in the next 20 years, but it won't be that way if we don't solve that issue."

Both sides talk around the potential clawback of interest payments already made to some retirees as part of the pension fund's Deferred Retirement Option Program. The compromise potentially allows for the fund's board to pull back the 8 percent to 10 percent interest payments made to retirees who continued working while putting their pension checks in fund accounts, but it doesn't require the board to do so, as an original draft of the bill would've. Doing so now would require a two-thirds vote from the board, meaning the city would need two votes from the five board members appointed by police and firefighters to even attempt a clawback.

Van Republican state Rep. Dan Flynn, the author of the house version of the bill, said he believes the state's lower chamber will accept the Senate comprise and pass the bill to Texas Gov. Greg Abbott's desk before the legislature adjourns May 29.

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