AUSTIN (CBS11) – Ten thousand current and retired Dallas police officers and firefighters are hoping Monday’s state hearing will lead to a plan that will rescue their troubled pension fund from going broke within ten years.
On Monday afternoon, some attended a hearing before the House Pension Committee, the first legislative body that will consider a bill aimed at getting the fund back on its financial feet.
At the hearing, Chairman Flynn said, “Anyone opposed to this bill is standing against the Dallas police and fire families, public safety, and the city’s responsibility to take care of them.”
Flynn was putting opponents, including Dallas Mayor Mike Rawlings on notice.
Mayor Rawlings at first supported Flynn’s proposal, but now opposes it because he says it costs city taxpayers too much money. “Under this bill, taxpayers are made to hurt the most, far more than I agreed to, far more than the taxpayers deserve.”
The Mayor says changes Flynn recently made to the bill will cost city taxpayers an extra $2 billion over time.
But Rep. Flynn and the Executive Director of the Dallas Police and Fire Pension Fund, Kelly Gottschalk, disagreed saying the city mis-calculated, and that the city would be on he hook for $1.1 billion.
Gottschalk told the committee that besides taxpayers, the police officers and firefighters are also having to contribute more to their retirement going forward. “The reduction in the benefits and the increase in contributions are much more than we ever anticipated than when we started the process, but we understand that’s necessary for solvency.”
Gottschalk and the pension fund’s board chairman Sam Friar say they support Rep. Flynn’s plan.
But they both say they aren’t happy that the lawmaker’s plan pushes the retirement age from 55 to 58.
Flynn explained that the fund gives out more than it takes in.
Last month, he said the fund had a $6.4 million deficit.
Flynn reminded lawmakers, and leaders of the city and pension fund that the state legislature must pass a bill by the end of the session in late May. “I don’t want us to leave this legislative session without having a plan. We don’t all have to think it’s great or wonderful, but we all have to know it’s going to be something on-going.”
He says if nothing is accomplished this session, the pension problem will only become more severe.
Mayor Rawlings said he thought the bill in its current form would hurt taxpayers and the city’s efforts to pay for libraries and street repairs among other items. “Instead of fixing the pension, it will unduly restrain the city and truly escalate this crisis in a way that will harm our taxpayers.”
But Rep. Flynn said, “This is not a bailout plan of the pension. It’s doing what is right and ensures a public safety presence on the street and taking care of the families that take care of us.”
For his part, Flynn blamed the pension fund’s troubles on the city and police officers and firefighters. “The members voted to enhance the benefits and the members are directly responsible for the poor management that led to the millions in loss revenue in investment.
However, let’s not forget the city of Dallas seemingly chose to ignore the problem for some time. Mayor after mayor has ignored it with the hope it would go away, believing the economy would make things better.”
But Mayor Rawlings said when he requested information from the previous pension fund administrators about their financial information, he says he was rejected. “We could not get an auditor. They lied to the membership. They lied to the city. It is not the Dallas taxpayers, but the state I believe that is morally and legally culpable in this mess we find ourselves in.”
The Mayor pointed out that the FBI, Texas Rangers, and the Securities and Exchange Commission are all investigating the pension fund’s previous administrators.
Chairman Flynn responded by saying he and Attorney General Ken Paxton disagree with the Mayor.
Gottschalk, the pension fund’s Executive Director, said while she agreed that Mayor Rawlings may not have received information he requested from the pension fund’s past executive director, the city’s former council members who sat on the pension fund board also deserved blame.
She said during former Mayor Tom Leppert’s tenure, his city council appointees to the pension fund regularly missed meetings, including the six month period in which she said the pension fund board made some of its worst investments. “The problem is they didn’t show up. If you look back at the time, his (Leppert’s) appointees were widely reported in the press to have been taking lavish trips with the rest of the board.”
That included trips to Abu Dhabi, the capital of the United Arab Emirates, Gottschalk said.
There is wide disagreement on how the pension fund should be governed in the future.
Under Flynn’s plan, the city would have five appointees, and so would police and firefighters.
An eleventh person would be selected jointly.
Mayor Rawlings wants a change in governance of the police and fire pension board. He agrees the police and firefighters should select five people to sit on the pension board, and that city leaders select five members of the pension board. The eleventh person would be agreed upon by both parties. But if they can’t agree on the eleventh board member, Mayor Rawlings wants the state comptroller to appoint the eleventh seat.
Rawlings urged legislators to let the city have its own authority to fix the pension fund.
Going forward, the House Pension Committee will vote on the bill after considering changes.
From there, it will move to the full House before a Senate committee, then the full Senate vote on the legislation.
Governor Greg Abbott would have to sign it.