For too long, Dallas has faced a massive, unfunded liability in its Police and Fire Pension System. The problem has threatened the city’s fiscal health, and it requires a solution that both honors the commitment to first responders and ensures that pension contributions don’t consume so much of the annual budget that basic services are undermined.
Getting that balance right is not easy given the size of the required future contributions, but we believe that a majority of the pension system board has us on the right path.
The 6-5 approval of a “best and final” offer from the city to the pension system represents a fair compromise between the needs of the whole city and interests of retirees.
City Hall has already substantially increased its annual contribution to the pension fund by nearly 10%. This fiscal year, an eye-watering $225.7 million will go into the fund. That’s just the beginning of a long commitment in enhanced contributions aimed at getting the fund fully funded in the next 30 years.
Opinion
What the out years of that funding plan look like is hard to say. The variables of markets, payout requirements and more are too many. But the city’s plan, now subject to City Council and state approval, offers a variety of financial “corridors” the pension system can take based on returns and obligations.
Our prediction is the city will have to commit a substantial portion of its budget every year for a long, long, long time. That is just the fiscal reality of the promise and the cost burden.
We know that many are unhappy with where this deal landed. Pension trustees who represent police officers and firefighters believe that this best and final deal is an unfair gutting of a plan presented to the state by a prior board more sympathetic to their side. The city’s current offer, for example, does not include a cost of living adjustment.
In a perfect world of greater resources, that adjustment would have been possible. Remember that the pension replaces Social Security and can be the whole income of a first-responder retiree. We are not unsympathetic to the reality that their pensions have remained level while costs have increased.
The COLA cost, in our view, was simply not sustainable. The city has to also ensure it has funds for other priorities, including current public safety salaries, parks and other spending that keeps Dallas vibrant. That is the only real path toward ensuring we can fulfill our pension promises over the long run.
No deal is perfect. And this deal isn’t either. But it’s fair to all sides: retirees, residents and taxpayers.
It deserves approval so we can move forward.
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