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Dallas councilmember calls for firing of pension leaders over poor financial performance

The head of the Dallas Police and Fire Pension fund called the comments “very disappointing” and said the system has made progress.

DALLAS — The pension fund for retired Dallas police officers and firefighters has a rate of investment return significantly lower than others across the state, increasing the amount Dallas taxpayers must contribute to align with state requirements and leading one city councilmember to call for fund managers to be fired Tuesday. 

The Dallas Police and Fire Fire Pension System earned a 2% rate of return over 10 years, less than Houston, Austin and San Antonio, according to a city presentation.

Dallas is facing a November deadline to inform state leaders how it plans to fully fund the pension. To reach the requirement, the city will have to increase its contribution by an estimated $40 million next year. The 30-year shortfall tops $11 billion and City Council is still in discussions of how the money should be made up. 

“If we had been earning what Houston earns at 10% in the invested funds instead of 2% then we wouldn’t have this 11 billion-dollar shortfall,” Councilman Paul Ridley said. “We might still have a shortfall, but it would be substantially less.”

He said the fund managers should be fired and replaced with “someone who knows how to invest.” 

Kelly Gottschalk, the executive director of the police and fire pension, told WFAA Tuesday that Ridley’s comments were “very disappointing.” 

She said the comments were “not based on understanding behind the numbers. We have made progress.” 

The city’s Chief Financial Officer, Jack Ireland, told councilmembers Tuesday the funding challenges stem from “ill-advised” real estate investments fund managers made in the mid-2000s. 

The poor investments — and the financial challenges that resulted — led to a “run on the bank” as retirees pulled their pension savings. State lawmakers in 2017 changed the governance of the pension, increased employee contributions and set a 2025 deadline for a long-term solution to the funding issues. 

Gottschalk said the pension is still operating in the shadow of the poor decisions made by past managers. Existing “bad” investments have not yet been liquidated as the fund works to maximize possible returns, she said. Those investments impact the rate of return — and tie up funds the pension would otherwise have invested in higher return public stocks, she said. 

“Our returns are below our peers,” Gottschalk said. “We don’t deny that.”

But she said the fund has made changes to make sure bad investments don’t happen again and to maximize the returns it can make. “The things we do have control over, we do well,” she said. 

Nonetheless, city staff Tuesday recommended increased oversight of the pension fund. They also said there should be no change in the employee contribution rate and suggested a pay supplement of 1% to be added to the retiree base in 2025. 

“You can have all those dollars and all those investments, but there’s actual names and lives attached to every one of those,” said retired firefighter David Lindsey. 

He said recognizing the past investments were not wise was “disappointing,” but said he feels the fund is on the right track now. “I feel like they’re trying to do the right thing.” 

City council has not made any final decisions on how it will fund the pension to the state’s requirement, nor if it will attempt to include a supplemental payment to help with increased cost-of-living. The discussion is scheduled to resume in August. 

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