DALLAS (CBSDFW.COM) – Changes to the Dallas Police and Fire Pension proposed on Thursday can now move forward. That’s because on Friday, Dallas Mayor Mike Rawlings withdrew his request for a temporary injunction against the Police and Fire Pension Board.
Mayor Rawlings said he is still moving forward with a lawsuit, but the decision to withdraw the request for the temporary injunction means some Dallas police and fire retirees can withdraw more money than they originally could from the fund.
In a narrow 6-5 vote on Thursday, the pension board agreed to allow retirees to withdraw millions of dollars from their troubled retirement account.
The short-term proposal comes as state lawmakers are working with the pension board and administrators and the City of Dallas on a long-term plan to save the fund from running out of money in ten years.
The Dallas Police and Fire Pension Board responded to the Mayor’s action with this statement:
We’re pleased that Mayor Rawlings withdrew his request for a temporary injunction hearing. The Dallas Police & Fire Pension System now can move forward and administer the policy adopted yesterday to help provide retired members with equitable and impartial monthly access to some funds. We’re also grateful that we won’t have to devote additional resources and time to the temporary injunction request. Instead, we can focus on working with the city of Dallas and state legislators on a long-term solution to secure retirement funds for Dallas’ first responders.
Here is Mayor Rawlings’ full response to the Dallas Police and Fire Pension Board action on Thursday:
The Dallas Police and Fire Pension System (“System”), through a narrow majority of its Board, yesterday approved a DROP Policy Addendum (“Addendum”) that has two main components. The first part voids all outstanding DROP withdrawals, almost $200 million worth, and sets a time schedule that keeps the System and its assets intact through the end of March. For this reason, the most immediate threat to the System has temporarily abated. Therefore, I am withdrawing my request for a temporary injunction hearing scheduled for Tuesday.
Unfortunately because of the second component of the Addendum, I cannot withdraw my lawsuit asking for a court order requiring the System to hold the assets of the System in trust, while preserving the monthly pension payments to our police and fire retirees.
The majority of the Board of the System has voted on a reckless and, based on the allegations of my lawsuit, illegal plan to potentially pay hundreds of millions of dollars in DROP payments as it sells assets for cash, but no sooner than March 31, 2017. For example, the attached Addendum (“Board Liquidity Analysis, 1-10-17”) suggests a $198 million payment at the end of March, if approved by further vote of the Board.
In discovery in my lawsuit, we have seen an almost identical analysis contemplating the payment of $329 million in DROP withdrawals at the end of March 2017, and $620 million by the end of June 2017 (“Board Liquidity Analysis, 12-6-16”). These plans completely ignore the solvency of the System and only focus on the liquidity of the System. To borrow from the Board’s Chairman, “this would be financial suicide.”
Again, based on the allegations of my lawsuit, such a plan (i.e., liquidating assets to fund DROP withdrawals), if executed by the Board of the System, would be an egregious breach of its statutory duties. Given the great harm that would occur if such a distribution is made, I would again seek injunctive relief after any such vote, but before payments could be made. The Addendum, binding on the System, allows a time frame to accomplish this action.
In the meantime, I will be seeking information on the System’s conversion of high performing assets to cash. My concern is that the reckless payment of over $612 million in DROP withdrawals last year, plus the conversion to cash in order to pay even more DROP withdrawals, has cut the income producing potential of the fund from almost $200 million a year to possibly less than half that amount.
This lawsuit is about ensuring that we protect and preserve the Dallas police and fire pension, as well as my fellow taxpayers. If the System is to survive, a majority of the Board must act responsibly and abandon any effort to carry out, by vote, the worst contemplated abuses of the Addendum.
The DPFP then issued a statement Friday evening on Mayor Rawlings’ statement:
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