One of the top pension fund analysts in the country says the Dallas Police and Fire Pension Fund is in worse shape than officials have described.
Joe Nation is Project Director at the Stanford Institute for Economic Policy Research, a respected public policy expert, a professor at Stanford University and someone who has studied pension funds all over the country.
He says the situation is actually twice as bad as the public has been told, a financial hole so deep, the city may never be able to climb out.
Whether you agree with him or not, his expertise is unquestionable and his criticism of the Dallas Police And Fire Pension System, blistering.
"Dallas, if they are not the worst in the country, they are certainly one of the worst in the country in terms of their asset to liability ratio," said Nation.
Nation does not mince words.
Numbers speak the loudest and they are all over his website pensiontracker.org.
His analysis of the Dallas Police and Fire Pension System is based on numbers posted in the system's own reports.
Future annual investment returns are calculated to be 7.25 percent, per year.
Nation says that forecast is dangerously optimistic. Add to that the value of the systems, assets has dramatically diminished over the past four years from $3.6 billion to $2.1 billion.
"The problem is, because they've dug such a deep financial hole, to actually be fully funded in 15 to 20 years, they probably have to earn 13 or 14 percent per year," said Nation.
Nation says the Police and Fire Pension system's own numbers show that over the past ten years, the rate of return on their investments is not 7.25 percent but actually 1.79 percent.
As a result, he says, instead of an estimated $4 billion liability, the short-fall is closer to $9 billion.
Nation says all of this shows there is far less money available to pay retirees. "So they consistently play mathematical games and economic games to understate what they will owe in the future," Nation said.
Kelly Gottschalk, executive director of the Dallas Police and Fire Pension System, came on board after the damage had been done under the previous administration.
WFAA asked her about the past projections of an 8 percent annual return on investments. "That was absolutely not realistic," said Gottschalk who has already directed the fund to scale back last year's projected returns to 5 percent.
This year, the fund is projecting a loss on their investments. "For 2017, we've actually assumed a loss of 1.34 percent," said Gottschalk. "We know we are going to be changing the portfolio, and we know that we will be paying money out of the plan."
But Gottschalk also projects investment returns will rise back above 7 percent by 2020. That's what has Nation bothered and fearful that Dallas has dug a hole from which it cannot escape.
"This is equivalent to someone going to Las Vegas and saying 'Trust me. Trust me. It's going to be ok,'" Nation said.