Senate approves bill to rescue Dallas Police & Fire pension plan
Tuesday, May 23rd, 2017 @ 6:03PM
FOR IMMEDIATE RELEASE
May 23, 2017
AUSTIN – Today, the Texas Senate by a vote of 30-0 approved its version of HB3158, a plan that by all accounts would return the troubled Police & Fire Pension Fund to financial solvency. The bill’s passage comes after weeks of intense, back and forth negotiations headed by State Senator Royce West (D-Dallas) after the House bill authored by Rep. Dan Flynn (R-Canton) Chairman of the House Pensions Committee was approved on May 4. HB3158’s array of proponents – representing active police and firemen, retirees and the City of Dallas – were able to come together to reach agreement with just a week remaining in the 2017 Legislative Session.
“All parties involved wrestled with their own perspectives versus what are the hard facts of the matter,” said Senator West. “Basically the plan as it exists is financially unsustainable and cannot remain as it is. The reality is that each party had to make concessions if consensus was to be reached on measures that will 1) provide certainty for retirees, 2) make financial sense for the City of Dallas and 3) not overburden the taxpayers who had no role in the current plan’s plight, but at the end of the day, will pay for the solution.”
Problems involving the Dallas Police & Fire Pension plan have loomed for years, but came to a head in 2016 when current plan structure allowed massive withdrawals to be made by members. If unchecked, analysts say the plan would be bankrupt in less than a year. Given the fund’s current depleted status and poor returns on investments, even the most conservative estimates say the plan would still become insolvent in 10 years or less. Senator West says fellow Dallas state Senator Don Huffines’ input helped move tense negotiations forward.
Under the Senate version of HB3158, the pension fund will move from its current insolvency to becoming actuarially sound for a projected 46 years. The plan calls for the City to make a minimum $13 million annual contribution for seven years. At that point, the bill puts in place an actuarial review to determine if the plan is performing as projected and will gauge whether the City’s contribution needs to increase or can be lowered. The City will have the ability to make adjustments needed to ensure the plan’s viability, but any major plan changes will have to be approved by a two-thirds (2/3)vote of pension plan board members.
Critics have pointed to a governance issue that allowed plan members to gain control of the board and faulted the City for oversight failures. Under HB3158, the City of Dallas will gain a 6/5 board majority. With the Senate’s passage, HB3158 will go back to the House for a vote to reconcile the differences between the two versions. Pending agreement between the chambers, the bill would be sent to Texas Governor Greg Abbott for final approval.