Dallas' troubled fire pension plan continues to draw criticism

An alternative would allow police and firefighters to transfer over to a new city-run pension system with reduced guaranteed benefits but less risk of insolvency

By Tristan Hallman
The Dallas Morning News

DALLAS — The executive director of the Dallas Police and Fire Pension System blasted city officials for unveiling an alternative plan that would cast off the failing retirement fund — and thousands of retirees and active workers — and create a new plan.

Kelly Gottschalk said in an email to pension trustees Wednesday that she was shocked by the city's latest move. She laid the blame on Chief Financial Officer Elizabeth Reich and City Manager A.C. Gonzalez.

"I have to say, that in my more than 25 years in the public sector, this is by far, the worst display of public administration, public integrity, and ethics I have ever seen," Gottschalk wrote.

And she said Gonzalez, who will retire in two weeks, is hampering the negotiations. She said Gonzalez "wants to check something off of his list and doesn't seem to care about the ongoing operations of the city."

The email was sent during a stalemate in talks between the pension system and City Hall. Both sides are trying to find a way to save the pension fund from insolvency within 10 years.

The two sides had made some progress in negotiations but must try to sort out their differences over some major sticking points with a mediator this weekend.

But the city's alternative solution, unveiled days before the mediation, angered Gottschalk. While pension officials were aware of city officials' idea, which Gottschalk referred to as the "ICE FLOW plan," they didn't know it would be discussed publicly at the City Council. 

Gottschalk said in an interview that she felt blindsided and has been "very open to the city, probably actually to our detriment." But city officials have felt similarly surprised about pension board decisions, too.

An earlier version of the city's presentation that was posted online before Wednesday's council briefing did not include the proposed alternative.

In a statement sent by city spokeswoman Sana Syed, Reich and Gonzalez said they had "discussed the possibility of starting a new plan" in negotiations and "will continue to explore options" in the future.

The alternative would allow many police and firefighters to transfer over to a new city-run pension system with reduced guaranteed benefits but less risk of insolvency. Reich said the pension system would then have to figure out how to best pay out the money they have left to the remaining workers and retirees.

Gottschalk said the city's plan, as it was proposed, would leave 7,300 retirees, active workers and survivors without a safety net. She accused Reich of acting in bad faith.

Council member Philip Kingston, a pension board trustee, didn't agree with Gottschalk.

"I know there is a ton of pressure on Kelly, but I think she overreacted," Kingston said.

Kingston said the City Council, as trustees of taxpayers who could be on the hook for a fix, should explore other options, especially less expensive ones.

He said saving the pension system remains the first option. And he faulted his fellow trustees, saying the board has "demonstrated it lacks either will or power to create a positive outcome from this crisis."

Gottschalk said in the interview she didn't believe she overreacted considering the stakes for retirees and older police and firefighters.

Council member Jennifer Staubach Gates, who is also a board trustee, said she understands Gottschalk's frustration. And Gates also wants to take care of retirees.

But she said having other options will help move the conversation forward because right now, "we're just trying to stay afloat, which I don't see as a solution."

The pension system is in something of a no-man's land. Officials don't have a solution that has the backing of their members. The members had rejected a proposal, which would have required a taxpayer bailout to work, in a December vote. 

Instead, pension officials have had to work off the city's plan, which hinges on deeper cuts to benefits for retirees and active employees than the plan they had proposed.

State law governs the fund, meaning the Legislature will have to decide on any fix. Lawmakers in Austin have insisted that the city and pension system bring them a solution that both sides agree upon. 

But Gottschalk said in the email that after Wednesday's presentation, the mediation could work but "seems likely fruitless."

On Thursday, she said she still wants to come to an agreement.

"We have to try to solve this," she said. "We're still committed to making sure that the members have a pension. That's our first goal. If it takes mediation with a partner you clearly can't trust, that's what we have to do."

Copyright 2017 The Dallas Morning News

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