Dallas Police and Fire Pension Board likely won't agree with City's proposed plan, executive director says
DALLAS - There are now fewer than four months for the Dallas Police and Fire Pension Fund and the city to agree on a plan to make sure the pension remains solvent, but in a one-on-one interview with the executive director of the fund, we've learned the two sides are still far apart on many issues.
"We feel it every time we go to the grocery store," said retired deputy chief David Elliston.
Elliston spent 38 years with the Dallas Police Department, but now, with no cost-of-living adjustment in nearly eight years, his pension check doesn't go nearly as far.
"It does feel like it's a broken promise," he said.
Kelly Gottschalk, the Executive Director of the Dallas Police and Fire Pension system, says she knows the issue has been painful for members.
Gottschalk was hired in 2015 to help save the pension system after the previous director and board's bad investments nearly bankrupted the fund.
"In 2016 and 2017 the pension plan was running out of money, and we were facing a crisis," she said.
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It turns out the sins of the past are continuing to haunt the pension fund today, causing the fund's return to remain well below the national and Texas average.
To stop the bleeding, members took huge reductions in benefits.
Gottschalk says now, due to inflation, their purchasing power has dropped nearly 30 percent since 2016.
"Right now, if they had $1,000 in their pension, they would only be able to buy $700 worth of stuff that they could have bought in 2016 for $1,000," she said.
A state law passed to save the pension requires the pension board to submit a permanent plan by November 1, 2024.
Under the city's proposal, retirees would receive a small one-time 1% increase, followed by 1% stipends that do not get added into the base benefit.
The stipends, on average, would amount to about $540 a year, until 2046 in a best case scenario.
"To go another 22 years with no cost of living adjustment, I think would be devastating for the members," said Gottschalk.
Separately, there's the pension board's plan, following a formula that would increase each year by about $100.
As an example, a retiree with 20 years of service and 8 years as a retiree would receive an $800 stipend in 2025, followed by $900 the next year and $1,000 in 2027.
Gottschalk says it is still nowhere near the cost-of-living adjustment civilian employees receive, which is up to 5% a year, based on the Consumer Price Index.
"They've gotten a 28 percent increase since 2016 when inflation's been 29 percent. Our members have gotten zero," she said.
If the city and the pension board do not agree on a plan, Gottschalk says the pension board plan would take precedence, unless state lawmakers pass a new law.
"We've been working with the city and would really like to have a plan both our board and the city agree to. That's been our goal all along. I am not sure if we will be able to get there," she said.
The pension fund's recommended plan would also prevent a retiree's purchasing power from dropping more than 30 percent from where it is today.
The pension shortfall the city needs to fill is $3.5 billion.