4
| News |

Dallas Police and Fire Pension System Is in Deeper Trouble Than Expected

^
Keep Dallas Observer Free
I Support
  • Local
  • Community
  • Journalism
  • logo

Support the independent voice of Dallas and help keep the future of Dallas Observer free.

The Dallas Police and Fire Pension System's continued poor performance is a threat to city's credit rating, the bond rating service Moody's said this week.

On July 9, a revised audit of the system revealed it had about $3 billion in assets, 6 percent less than was reported to the pension fund's board in May, according to Moody's. The asset revision was the second for the plan in 2015, which highlights the risk the fund poses to the city's credit. As the pension system's unfunded liabilities grow, so does the weight on the city, which is on the hook for its police and firefighters pensions.

Because of the audit revision, earlier this month the pension's board reduced how much it expects to earn from investments in the future from from 8.5 percent to 7.25 percent. At a rate of 7 percent, Moody's projects the pension system could be out of money by 2038.

In an attempt to right the ship, the pension has installed a new executive director, Kelly Gottschalk, and suspended enrollment in the lucrative "DROP" program. The Deferred Retirement Option Plan allowed police or firefighters to work the 20 years needed for a full pension, continue working, and have their pension payments deposited into an account with a yield as high as 10 percent. Dallas City Council member Scott Griggs, who's also a member of the pension board, says hard work's ahead, but he's keeping the faith.

"We have our work cut out for us and we are going to return the Pension System to health and growth," he said. 

The pension system and DROP have served as one of the primary tools to retain Dallas officers. Dallas pays less than neighboring departments, but the DROP program has made more than 200 cops millionaires.

"We've always had the lowest pay. Our health benefits are some of the worst in the state," Dallas Police Association President Ron Pinkston told The Dallas Morning News in January. "But we had a great pension for a young recruit to hang his hat on coming to Dallas — other than the ability to chase some of the worst criminals in the state."

Currently, Dallas' Moody rating is Aa1, the second highest possible.

Keep the Dallas Observer Free... Since we started the Dallas Observer, it has been defined as the free, independent voice of Dallas, and we would like to keep it that way. Offering our readers free access to incisive coverage of local news, food and culture. Producing stories on everything from political scandals to the hottest new bands, with gutsy reporting, stylish writing, and staffers who've won everything from the Society of Professional Journalists' Sigma Delta Chi feature-writing award to the Casey Medal for Meritorious Journalism. But with local journalism's existence under siege and advertising revenue setbacks having a larger impact, it is important now more than ever for us to rally support behind funding our local journalism. You can help by participating in our "I Support" membership program, allowing us to keep covering Dallas with no paywalls.

We use cookies to collect and analyze information on site performance and usage, and to enhance and customize content and advertisements. By clicking 'X' or continuing to use the site, you agree to allow cookies to be placed. To find out more, visit our cookies policy and our privacy policy.

 

Join the Observer community and help support independent local journalism in Dallas.

 

Join the Observer community and help support independent local journalism in Dallas.