Attorneys, Officials Clash Over Funding Pension Plan

Firefighter gear | Image by Firefighter Montreal/Facebook
Firefighter gear | Image by Firefighter Montreal/Facebook

City officials and the attorneys who represent the Dallas Police & Fire Pension System disagree over whether the Dallas City Council must approve its 30-year funding plan.

“The System’s board has exclusive authority to adopt a pension plan,” a letter from the law firm Haynes and Boone to the Texas Pension Review Board reads, KERA News reported. “No City approval is contemplated or needed.”

Along with the letter, the lawyers included a 91-page statutory analysis.

The Dallas Express reported last week that the City of Dallas is scrambling to resolve a substantial shortfall in the police and fire pension, which is estimated to be roughly $1 billion. Under a state law enacted in 2015 and amended in 2021, that process must include a Funding Soundness Restoration Plan submitted to the Texas Pension Review Board.

City Attorney Tammy Palomino sent a May 10 letter to Texas regulators, claiming she “only recently became aware” of the communication from the Dallas Police & Fire Pension System’s (DPFPS) attorneys, per KERA. She said its interpretation of state law is “plainly incorrect” and claimed that council members must approve any plan submitted to the Texas Pension Review Board.

“The taxpayers of Dallas are being expected to fund the Dallas Police and Fire Pension’s gap and must have a say in this process,” said Council Member Tennell Atkins (District 8) in a statement, per KERA. “It is affirmed by law, as well as the Texas Pension Review Board, who will ultimately be responsible for accepting the funding plan.”

In a separate statement, Atkins said the City remains on schedule to submit its plan for how to fund the pension system for the next three decades, as reported by The Dallas Express.

“We are making progress, and we all remain committed to ensuring the funding soundness of the DPFPS and protecting pension benefits for all City employees and retirees. We look forward to sharing further updates soon,” he said.

Atkins chairs the City’s Ad Hoc Committee on Pensions. During a Transportation and Infrastructure Committee meeting in April, he and other council members said they were considering reducing the City’s sales tax allocation to Dallas Area Rapid Transit (DART) by 25% to help cover the pension shortfall.

“It’s just a discussion right now,” Atkins said.

Dallas, Irving, Addison, Plano, Carrollton, Cockrell Hill, Farmers Branch, Garland, Richardson, Rowlett, University Park, Glenn Heights, and Highland Park are DART member cities. They relay a 1-cent sales tax to DART, which accounts for about 75% of the agency’s roughly $1 billion budget.

Council Member Paula Blackmon (District 9) criticized DPFPS for how it has communicated with the council.

“So much for working together,” she told KERA. “This was sent in January, and we just found out about it a couple of weeks ago. It kind of goes to the illusion of working together, or disillusion, right? This is a serious problem, and we have to take it seriously. Antics and letters and lack of transparency doesn’t help. We need the best and brightest minds to come to the table and really look at thoughtful solutions.”

In the statutory analysis, DPFPS lawyers detail a pair of Texas statutes on how pension systems may develop funding plans with political subdivisions, claiming the laws make “no provision for adopting or amending a pension plan. Nor does it address how a plan or amendment becomes effective.”

But Palomino does not agree.

“If the two statutes are harmonized, the plan must be approved by city council under the provisions of Chapter 802.20,” Palomino wrote, per KERA. “If the two statutes are irreconcilable, then a plan must still be approved by city council under the provisions of Chapter 802.”

During the Transportation and Infrastructure Committee meeting on April 15, Atkins told DART CEO Nadine Lee that Dallas is “in a crisis situation” regarding its pension fund.

“So, I’m just trying to make sure that you understand, from my position as a chairman of the pension fund, that I’m looking at everything and looking at revenue,” he said. “And it’d be a shame if I did not ask you that hard question.”

Dallas officials must submit the City’s funding plan by the fall.

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