Dallas Police and Fire Pension System faces $3.5 billion unfunded liability, actuary says
Dallas PD, Fire Pension has $3.5B unfunded liability
A Dallas City Council ad hoc committee learned how much money it is going to take to put the Dallas Police and Fire Pension System on safe financial ground.
DALLAS – The Dallas Police and Fire Pension System remains in financial trouble.
On Thursday, a Dallas City Council ad hoc committee learned how much money it is going to take to put the pension on safe financial ground.
An independent actuary, Cheiron, told council members that the Dallas Police and Fire Pension System has a $3.5 billion unfunded liability.
While representatives explained the city could pay a portion of that as a lump sum, the presentation given to council members only showed scenarios with the city paying that amount out over 30 years.
The independent actuary told the Dallas City Council ad hoc committee that Dallas police officers and firefighters should not face any more benefit cuts, nor should their contributions increase.
Cheiron representatives said that if the burden placed on police and fire were to increase, or benefits decrease, it could have an impact on recruitment.
So that means it is up to the city of Dallas to fill in the gap to help the pension become solvent.
Dallas City Councilwoman Cara Mendelsohn asked about how dire the situation is.
“I heard Kelly say 30% funding, that seems treacherous,” she said.
“It is not ideal,” said Bill Hallmark, with Cheiron. “You are effectively hovering in the low 30s for a few years until you get to the higher contribution rate.”
“The question is, is the system at risk of failure at that low of a level?” Mendelsohn asked.
“Only if the city cannot make its contributions,” Hallmark responded.
Dallas Mayor Pro Tem Tennell Atkins later said the city will do whatever it takes to keep the pension funded.
The actuary said that for the city to keep its annual contribution rate the same as it is now it would need to make a lump sum payment of $1.3 billion.
Mendelsohn asked if paying the lump sum is similar to paying down a mortgage faster, meaning it saves you money.
The actuary said the city’s lump sum payment would act as an investment, allowing the fund to earn a return.
The next meeting to delve into a plan to fund the pension is set for December 14.
