Dallas police, fire retirees face uncertainty over cost of living adjustment
DALLAS - Thousands of retired Dallas police and firefighters are once again facing uncertainty about when and if they will receive a cost of living adjustment.
The city approved a new plan to fund the struggling pension system, but there are big differences with the pension board's plan and a lawsuit complicating matters.
The legal battle is underway, with the city saying it will withhold its proposed stipends from retirees.
Retirees have already gone nearly 8 years without a cost of living adjustment, but with the city failing to agree on a plan to provide one, it's unclear just how much longer they will have to wait.
Before Wednesday's vote, Castro told city council members that their plan would send a terrible message.
"You will essentially re-declare a pension war against all first responders. You had 7 years. Re-declaring war is the best you can do at the 7-year mark?" said Jaime Castro, the president of the Dallas Police Association. "The message will be clear, if you don't need a raise in 22 years after you retire in today's economy, then the city of Dallas is for you."
While retired civilian employees have seen their benefits go up 27 percent over the last 7 years, retired Dallas police and firefighters have seen their buying power drop, with no cost of living adjustment since 2016.
What $1,000 would buy at the time is equal to having only $700 now.
Under the city's plan, the decline is set to continue over the next 20 years.
Dallas approves new 30-year police and fire pension funding plan
The Dallas City Council approved spending $11 billion over the next 30 years to hopefully fix a more than $3 billion budget shortfall.
David Elliston, who spent 38 years on the force, tried to explain the impact.
"For many, this is their sole source of income, as they don't qualify for social security," he explained. "Inflation is literally eating your lunch."
The city's plan is separate from one that was already approved by the board that manages the pension fund.
Councilwoman Gay Donnell Willis takes issue with the city being required to fund a plan it does not control.
"Ask them about their strategy to say that the fund has a right to cram a plan down the taxpayers throat. How is that supposed to sit with us? it introduces uncertainty to our budget, which calls things like the stipend into question. I hate they took this move," she said.
Here is how to two plans compare.
Under the pension fund plan retirees would receive a cost of living adjustment that would increase year after year, similar to a raise.
The city's plan would provide a stipend of $500 for the average retiree. Similar to a bonus.
The annual benefit stays flat, not increasing to curb the effect of inflation.
"It impacts these members' lives for the rest of their lives," said Kelly Gottschalk, the executive director of the pension fund.
Gottschalk said the cost difference to the city is four percent, or $8 million for the first year.
She also told FOX 4 that the city's plan could be changed by a future council and that is why the pension fund sued to block it.
"The lawsuit is not about the plan, like whose plan is better, and it is not about forcing the city to agree to our plan. The lawsuit, it is merely about the difference of opinion on how to get a binding plan," Gottschalk said.
Councilwoman Cara Mendelsohn said the city could afford to provide a cost of living adjustment for retirees.
"We do not have a revenue problem, we have a spending and management problem," she said.
The mayor made a promise to retirees.
"I'd rather not be the mayor of this town than to break a promise to you of anybody in this town. You have it from me, we are going to get it done," said Mayor Eric Johnson.
Gottschalk says under the city's plan, retirees would lose another 30 percent in buying power over the next 20 years.
A plan to fund the pension is not set to take effect until October 2025, so there is some time for the courts or legislature to figure out who has the final say.