A deal has been reached on a conceptual agreement to amend a House bill to rescue the failing Dallas Police and Fire Pension fund.
State Senator Royce West and Don Huffines made the announcement in Austin, Thursday afternoon.
Delicate negotiations, brokered by West and Huffines, had been underway for days.
“The city wants this to work out and the associations want this to work out,” Huffines said. “We’ve got to stop the animosity. I am committed to being a fair broker in this process for all sides.”
West said some groups – which he did not identify – have not signed off on the deal yet.
“Is everyone happy? No. Which means we have a pretty good bill,” West said. “There’s still some things that the organizations want and still some things that the city wants.”
The House bill, sponsored by State Rep. Dan Flynn, passed unanimously over the objections of the city and Mayor Mike Rawlings.
The bill gives the city a 6-5 majority on the board. However, any changes that reduce benefits, increase contributions or seek to “claw back” payments on special retirement savings accounts known as DROP accounts would have be approved by 2/3 majority of the board.
The city has been seeking to do a claw back to recoup some of the unsustainable benefits that were paid out over the years. DROP was a big reason for the fund’s looming insolvency. Retirees have ferociously objected to the claw back concept, saying it amounts to theft and that it’s illegal.
“The city will not be able to run over those beneficiaries,” West said. “We believe that’s adequate protection for the members of the plan.”
But most importantly for the city and for taxpayers, it would provide a mechanism where the city's payments could be reduced if an independent analysis concludes the pension would be actuarially sound at a sooner date.
The city had objected to Flynn’s bill because it set a minimum contribution amount for the city that would rise over time. Rawlings objected that it would effectively mean that the city would be paying for “phantom employees.” He called it a “taxpayer bailout.”
The Senate plan would set that minimum contribution amount at seven years.
Under the deal, an independent analysis would be conducted in 2024. It would then up to the legislature to approve changes to the pension in 2025 if needed.
“If for some reason they are not on that glide path to financial soundness, we come right back into a legislative session and the legislature will have an opportunity to address it,” West said.
If that does not happen, after seven years, the city would revert to a 34.5 percent contribution amount minus overtime pay and the minimum overall contribution amount would go away.
The House bill would fund the pension in 43 years. The amended version would do it in 46 years.
West also thanked Flynn for his “yeoman’s work” on the bill.