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Tuesday May 23, 2017 512-463-0123

Senate approves bill to rescue Dallas Police & Fire pension plan
Senator West says agreement a must

AUSTIN Today, the Texas Senate by a vote of 30-0 approved its version of HB3158, a
plan that by all accounts would return the troubled Police & Fire Pension Fund to
financial solvency. The bills passage comes after weeks of intense, back and forth
negotiations headed by State Senator Royce West (D-Dallas) after the House bill
authored by Rep. Dan Flynn (R-Canton) Chairman of the House Pensions Committee
was approved on May 4. HB3158s array of proponents - representing active police and
firemen, retirees and the City of Dallas - were able to come together to reach agreement
with just a week remaining in the 2017 Legislative Session.

All parties involved wrestled with their own perspectives versus what are the hard facts
of the matter, said Senator West. Basically the plan as it exists is financially
unsustainable and cannot remain as it is. The reality is that each party had to make
concessions if consensus was to be reached on measures that will 1) provide certainty for
retirees, 2) make financial sense for the City of Dallas and 3) not overburden the
taxpayers who had no role in the current plans plight, but at the end of the day, will pay
for the solution.

Problems involving the Dallas Police & Fire Pension plan have loomed for years, but
came to a head in 2016 when current plan structure allowed massive withdrawals to be
made by members. If unchecked, analysts say the plan would be bankrupt in less than a
year. Given the funds current depleted status and poor returns on investments, even
under the most conservative estimates say the plan would still become insolvent in 10
years or less. Senator West says fellow Dallas state Senator Don Huffines input helped
move tense negotiations forward.

Under the Senate version of HB3158, the pension fund will move from its current
insolvency to becoming actuarially sound for a projected 46 years. The plan calls for the
City to make a minimum $13 million annual contribution for seven years. At that point,
the bill puts in place an actuarial review to determine if the plan is performing as
projected and will gauge whether the Citys contribution needs to increase or can be
lowered. The City will have the ability to make adjustments needed to ensure the plans
viability, but any major plan changes will have to be approved by a two-thirds (2/3)vote
of pension plan board members.

Critics have pointed to a governance issue that allowed plan members to gain control of
the board and faulted the City for oversight failures. Under HB3158, the City of Dallas
will gain a 6/5 board majority. With the Senates passage, HB3158 will go back to the
House for a vote to reconcile the differences between the two versions. Pending
agreement between the chambers, the bill would be sent to Texas Governor Greg Abbott
for final approval.

For more information, please contact Clifford Sparks or Kelvin Bass at 512-463-0123.