New Coalition Formed To Help Fix Dallas Police And Fire Pension Fund

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DALLAS (CBSDFW.COM) – Three former Dallas Mayors and 10 business and civic groups are joining forces to help save the troubled Dallas Police and Fire Pension Fund.

They’ve formed Taxpayers For A Fair Pension, and they say the goal is to guarantee an equitable pension system for all firefighters and police officers and protect city taxpayers from big tax increases.

Former Mayors Tom Leppert, Laura Miller and Ron Kirk are co-chairs of the group, and members include: Dallas Citizens Council, Dallas Regional Chamber of Commerce, Dallas Black Chamber of Commerce, Greater Dallas Hispanic Chamber of Commerce, Greater Dallas Asian American Chamber of Commerce, North Dallas Chamber of Commerce, Oak Cliff Chamber of Commerce, Stemmons Corridor Business Association, MetroTex Association of Realtors, and The Real Estate Council.

The organization also hopes to work with the Texas Legislature, which must approve any deal to permanently fix the pension fund.

Without major changes, the city has said the fund could run out of money within ten years.

On Friday, former Mayor Leppert said, “We hope this coalition becomes a voice to how important this issue is, communicate what the issues are, and hopefully be a positive force in coming up with a solution. There is too much at stake.”

As part of its grassroots effort, The Taxpayers For A Fair Pension has a website, Facebook page, and Twitter handle.

The President of the Dallas Police Association or DPA, Sgt. Mike Mata, said he has concerns about the new campaign.

“I don’t understand why it’s necessary to create a site to dog pile on the firefighters and the police officers. We know what needs to be done. It’s almost to the point where we are trying to turn the public against the firefighters and police officers of this city.”

Leppert responded, “I hope that’s not the case.”

Dallas’ current mayor, Mike Rawlings, said, “This is not for or against police and fire. We all love our police and fire.”

Rawlings said he thinks the new coalition is healthy. “It really was taxpayers who’ve said we’ve really got to get through this financial crisis. We have to take care of the police and firefighters, but the taxpayers need a seat at the table.”

On Monday, a mediator worked with the city, police and fire associations and the police and fire pension system board to try to reach agreement on a permanent fix.
But all parties agreed to end the talks two days later since not enough progress was made.

On Friday, Mayor Rawlings said all parties are continuing to talk.

He repeated what he told a hearing Thursday before the State Pension Review Board in Austin. “I want to negotiate with police and fire officers themselves, not the plan’s board. The plan board’s role is to keep the plan going, not to negotiate benefits.”

For her part, Kelly Gottschalk, Executive Director of the Dallas Police and Fire Pension System said, “The pension board has to be involved. They work for the fiduciaries of the plan. We’re talking about the pension here. The members of the board have been elected by the police and fire departments.”

Under the city’s proposal still under discussion, police officers and firefighters would receive cuts in benefits and increase their contributions to about $3.6 Billion during a 30 year period.

The city would add $190 million to the fund during the next 30 years.

In all, the city’s contributions would amount to about $4.1 Billion during a 30 year period, most of it consisting of the city’s retirement contributions to police and firefighters.

In Austin Thursday, Rawlings said, “At no time during the ongoing discussions between the City of Dallas and the Dallas Police and Fire Pension System have I been in support of a tax increase, which would place an undue financial burden on the backs of taxpayers. Furthermore, it is in the spirit of the fiscal conservatism of our state, I most certainly would not support imposing such a tax increase without the consent of voters.”

Gottschalk said there are still two main sticking points: She said the city wants those officers and firefighters who received the Deferred Retirement Option Plan or DROP to give back $750 million. And the pension board opposes such a move. But there are questions about whether that would be legal.

As part of the bill state lawmakers are considering, the state would require the Texas Supreme Court to rule on that.

The city wants immunity from any lawsuit possibly filed by a police officer or firefighter.

“What we’re really trying to avoid is we don’t want another 20 year litigation out there,” said Gottschalk.

If the Supreme Court found it against the law, according to Gottschalk, they would have to come up with an alternative.

Another sticking point centers around a lawsuit dating back to the early 1990’s that may go to trial this spring. It involves police and fire pay, and if the city were to lose, it could cost $4 billion. Mayor Rawlings has said that would bankrupt the city.

Thus, Gottschalk said the city is hoping the state legislature will grant the city sovereign immunity, which would end that lawsuit. If the legislature decides against that, and the city were to lose the pay lawsuit, and ultimately file for bankruptcy, Gottschalk said the city has requested to stop funding retirement contributions for police officers and firefighters, a move the pension board rejects.

Gottschalk said the pay lawsuit and pension troubles are separate matters, but that the new group, Taxpayers For A Fair Pension is trying to combine them. “They’re trying to blur the line for the taxpayers and the citizens between the city’s larger problem, the pay lawsuits, which is the $4 billion problem, and the pension.”

Mayor Rawlings has sharply criticized the pension system’s past leadership and decisions, and requested the Texas Rangers to conduct a criminal investigation. The FBI has been conducting a criminal investigation into past pension board administrators for about 18 months.

But Mata of the DPA said there’s more blame to go around. City council members who were appointed to the pension board by the previous Mayors, didn’t regularly attend board meetings. And between 2005 and 2007, Mata said the former council members were absent from meetings between 96 percent to 100 percent of the time.

“They all had city council who were supposed to be on the pension committees making these decisions, so they either didn’t do their fiduciary duty to the city of Dallas and bring up these problems to the Mayor and to the council.”

Mayor Rawlings countered, “The point is, who voted themselves the benefits? Who made the decisions? The majority made the decisions to hire certain executive directors who made bad business decisions.”

In its release, the Taxpayers For A Fair Pension said –

“The Pension Board adopted extravagant benefits for its members and made things worse through poor investment deals – and even borrowed millions for unduly risky investments.”

Pete Bailey, President of the Dallas Police Retired Officers Association criticized the new coalition, “This is just another attempt to manipulate public opinion in an effort to allow the City of Dallas to take over a pension system that is in peril due to awful managerial decisions and what is in my opinion, negligent oversight required by statute of the City by the Mayor of Dallas through the city council members assigned to the pension board of trustees.”

Leppert though said, “I hope we get beyond the point of establishing blame. What we need to come up with is a solution.”

He doesn’t want this issue causing any problems that could hurt the city’s booming economy.

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One Comment

  1. The city has not negotiated with the members of the pension system in good faith because they think the state legislature will give them a pass on their responsibility under the law and leave all of the police officers and fire fighters out in the cold.
    The City of Dallas claims the problems with the Police and Fire Pension are due to overly generous benefits and poor investment management but they fail to admit that the City of Dallas created DROP had representation on the Pension Board that did not raise any objections to the investment policies.
    The City of Dallas also knows they may be liable for nearly four billion dollars from a pay lawsuit because of their continuous refusal to abide by the law.
    The plan put forth by the City of Dallas would give them a pass for their past bad acts and relieves them of their responsibility under the State Constitution.
    I believe the plan the city has put out is illegal, and would surely lose in court, but I suspect the City may want this tied up in court, to further damage the Pension.

  2. Just my .02 cents, But…This “Taxpayers For A Fair Pension” group has 3 past Mayors, and our current Mayor. Four top city execs, that know how bad the pay is in Dallas, and all have been involved with both the Pay Lawsuit and had council members on the Pension Board. Like the Pay Lawsuit, the DPFP Pension issues did not happen overnight or in the last few years. Most pension fund members, have no idea of what all the pension fund is invested in or who they invested with. I know I didn’t. I was always hearing from retiree’s and the “Old Board” members I knew in passing, phrases like ” Nothing to worry about we’re doing good” or “everything is fine”, and the old standby “All the trips are for due diligence, on investment properties”. I trusted that what I heard was the truth, but our 3 previous mayors had four representatives reporting to them that should have been giving detailed reports.

    As I recall, Mayor Miller, supported Dallas Police & Fire for a 17% pay raise while she campaigned and we fell for it. After being elected, she changed and pushed a plan for raises on a 5%-5%-5% plan, and she hired a PR firm and fought against our 17% plan. She won that round and our first 5% raise didn’t even start till April, with no back pay from October start of the fiscal year. Mayor Miller also cut our S.I.P checks from the budget (my check would have been 5%). When she started as Mayor, I lost 5% in a lump sum, losing that SIP check. The less than 5% raise (because it was held till April), didn’t make up the loss. As it has always happened, we got a raise and the City of Dallas, a self insured entity, raised insurance rates. My first pay raise and year of work under Mayor Miller ended up costing me about $100. per month.

    Under Mayor Ron Kirk, we had AAC being built and his wife being put on the board of AAC, but even with all the negotiations going on between the City and AAC, no one at the city considered that move as a conflict of interest. Wasn’t it Ron Kirk who made a statement about the pay lawsuit along the lines of ” You guys are thinking you’ll get Jaguars, and you’re going to end up with Yugo’s”. To me personally, that translated to “you’ll win but it won’t be as much as you think”, but a win is a win. I don’t recall Mayor Kirk voicing any complaints about the Pension Fund, or DROP.

    I honestly cannot remember much about Mayor Leppert. Was Mayor Leppert in charge when we took “Furlough Days” to save the city money, and when civilian jobs were cut? Civilian jobs cut that made sworn officers into file clerks and receptionists (Officers taken off the streets someone had to do the work). I don’t recall him voicing concerns about our pension or DROP.

    I’m curious about which council members (if any) took some of these “due diligence” trips, and if any council members took trips in 2007, the year no council members attended any of the pension funds meetings. I feel that the three Ex-Mayors, and Mayor Rawlings all share in the shape that the pension fund is in. Rawlings is fond of saying he noticed problems with the DPFP Pension fund and DROP accounts as soon as he became Mayor in 2011. Why did Mayor Rawlings, wait 5 years to challenge what was going on? If any of these Mayors really cared about “First Responder’s” and our pensions, they would have settled the Pay Parity Lawsuit, during their tenure.

    Mayor Rawlings does not want to raise taxes in Dallas, to help raise funds to support the Pension, yet he wants to try and take back earned interest money from retiree accounts, in lump sums. I planned my retirement living based on my 401K account and 457K account through the City of Dallas, and my DROP account. Our DROP accounts were self sufficient for years, we were paid a high interest rate because the DFFP investments were earning a much higher rate. DROP, retained officers, They could retire on paper and still get a paycheck for staying with DPD doing the same work, they no longer had to go to another police department, or county sheriff’s office to get a paycheck as they banked retirement checks or invested with Fidelity or Schwab, or any of a number of IRA accounts to make their money work for them. While I was talking with neighbors I’d mention DROP and the high interested it was earning, and my neighbors would say “My IRA account earned 12% – 16%, do you want my brokers name and phone number” This was the point where all I could say is “no thanks”, I can’t invest it myself my pension board handles the investing I just provide the cash for my account, I get whatever interest they’re paying this certain year”

    Pension members voted to cut the interest rate back in 2010, and to have DROP members still employed with the city start making contributions to the Pension I went into DROP in 2003 at age 50, I chose to stay working for Dallas PD because, it meant I’ll get paid regularly just be banking my pension check the City. Pension leaders including 4 city coumcil members had the DROP plan paying a great rate at the time and that kept me from having to juggle money as a day trader or hedge fund manager. SO, in January of 2003, I locked in my pension at $44K a yr. and continued working as a Detective in Youth Division. I processed kids that were arrested for class “C” offenses to “Capital Murder”, I responded to the field on Kidnapping , Amber Alerts, shooting and Stabbing of victims under the age of 17. Drop was getting 72% of the average of my best three years of work. I was getting my regular check. Drop allowed me to stay with the city of Dallas and work longer around life long friends.I would not need to go be a bailiff telling cop stories between trial. Or I wouldn’t have to go be a Police Chief in a small department 200 miles from Dallas

    City leaders don’t want to raise property taxes at a rate of $5. to $10. per household, spread out over close to a million household, But they feel our DROP accounts were too good and they want to pull our earned benefit right out of the accounts, Several thousand accounts. They want money back from those of us with all our funds still in DROP, and they want to take back money from retiree’s that put their kids through college, or members who paid for a loved one’s medical bills, and funeral expenses. It doesn’t matter if a retiree spent his money on lavish trips, or high dollar cars, and jewelry. Mayor Rawling wants the interest you earned given back. If you lost half in a divorce, he wants it back. Honorably retired officers and firemen and survivors of those killed in the line of duty. He “Rawlings” wants to rip benefit money from every drop account whether it puts a retiree on the street, living under a bridge or not.

    Respectfully Submitted,

    Jerry C Smith, #4223
    Retired Detective
    Dallas Police Department 1979 – 2012

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