Every time our city has hired a new police officer or firefighter, we have made them a promise: If they spend their career putting their lives — and their long-term health — on the line to keep us safe, we will give them a pension they can rely upon in retirement.
Over the past decade, our promise to our first responders and their families has been put in doubt. Years of uncertainty, legal disputes and anxiety have cast a long shadow over the Dallas Police and Fire Pension System and City Hall. But on Wednesday, by approving a new funding plan to stabilize the system, my colleagues on the Dallas City Council will have the opportunity to reaffirm our city’s promise to its public servants.
I will vote for the plan, and I urge my colleagues — and on Thursday, the Dallas Police and Fire Pension System trustees — to do the same. We must take responsibility for a solution, even though the problems started long before any of us were elected or appointed.
Here is the quick history: A couple decades ago, pension fund leaders began chasing big investment returns from risky and downright outrageous investments. Raw, undeveloped land in remote areas. Luxury homes in Hawaii. A resort in Napa. None of it penciled financially, and these real-estate gambits were masked by valuations that were untethered to reality. Meanwhile, pension leaders promised and paid out lucrative, unaffordable benefits. This included lump-sum accruals on top of monthly benefits, which undermined the stable, collective financial security that pension funds are meant to provide. The eventual result was a panic-induced “run on the bank” that drained hundreds of millions of dollars of cash from the fund.
Opinion
It was a mess. By 2016, the pension system wasn’t just in poor financial health — it was terminally ill. Through a painful period, city officials worked with pension leaders, police and fire associations, and the Texas Legislature to develop what amounted to a major surgery to keep the system alive. This plan also included a set of doctor’s orders to the city and the pension system to return in about a decade with a viable, long-term plan to rehabilitate the fund.
This all may sound like a lot of trouble for a defined-benefit pension plan, the likes of which have become nearly extinct in the private sector. But the fact is that Dallas owes its retirees, and these pension plans remain an important tool for recruitment and retention in a competitive environment.
My administration understood the assignment. I created an ad hoc committee on pensions, and we turned to experts for advice, guidance and options. We also made public safety and taking care of our first responders our top priority.
Since 2019, the city has increased police officer and firefighter starting pay by nearly 60% and contributed more than $1 billion to the pension fund through its annual budgets. Our new police chief, Daniel Comeaux, has boosted our hiring efforts to bring on more officers.
The pension funding plan will help further our efforts by:
- Committing the city to contributing more than $1.2 billion to the pension system over the next five years, giving the fund a major boost that will enable its leaders to generate positive long-term returns through sound investments.
- Providing a blueprint for increasing contributions over time to return the pension system to full funding over a 30-year period.
- Maintaining the base benefits and first responder monthly contribution rates established under the 2017 plan.
- Providing opportunities for retirees to receive modest annual stipends, in addition to their monthly base benefits, to help with the rising cost of living.
This has been a team effort. City Manager Kim Tolbert and her staff, our city attorneys, our ad hoc committee members and the pension board have worked hard to find a viable path forward in the face of a complex problem.
Ultimately, this solution still won’t make everyone happy. And it won’t be cheap. But this plan is the best possible deal for taxpayers, for retirees and for our first responders — and it’s a solemn promise kept.
Eric L. Johnson is the 60th mayor of Dallas.