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Bill to Reform Dallas Pension System Advances

May 17, 2017

The Texas House of Representatives passed a “framework” to shore up the city’s public pensions, which have been on the path toward default for years.

The Texas House of Representatives passed a “framework” to shore up the city’s public pensions, which have been on the path toward default for years.

On May 4, the Texas House of Representatives approved House Bill 3158 to increase the amount of money Dallas government employees pay into their own pensions and create an 11-member pension board to oversee the city’s public-safety pension funds.

HB 3158 was sent to the state Senate on May 9.

Without significant changes, the Dallas Police and Fire public pension fund is expected to go broke by 2030 as a result of the unsustainable benefit promises and risky fund investments gone bad, such as real estate deals in Hawaii and other states.

Pensions in ‘Serious Trouble’

HB 3158 sponsor state Rep. Dan Flynn (R-Canton) says his bill will prevent Dallas taxpayers from being forced to bail out the failing fund.

“Pensions are in serious trouble,” Flynn said. “They have major unfunded liabilities. They are actuarially unsound. If we are unable to achieve passage, the fund would go broke. The city does have an obligation. Their pension board and the city have a responsibility, and they have not owned up to that responsibility.”

James Quintero, director of the Texas Public Policy Foundation’s Center for Local Governance, says Flynn’s bill won’t lift the burden pensions are putting on Dallas taxpayers.

“Dallas’ public pension problems are not solved by the passage of HB 3158,” Quintero said. “At best, the bill lets officials kick the can down the road at taxpayer expense. At worst, it sets up a nightmare scenario that puts both Dallas taxpayers and retirees in harm’s way.”

Says System is Broken

Defined-benefit pension systems guaranteeing pension payout levels are “unworkable,” Quintero says. Defined-contribution plans, similar to those enjoyed by private-sector employees, are a much better option.

“The pension crisis unfolding is a prominent reminder that defined-benefit systems are unworkable,” Quintero said. “Public employees deserve a better, more sustainable retirement option, like defined-contribution plans.”

Author
Michael McGrady writes from Colorado Springs, Colorado.
mmcgrady@uccs.edu

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