Tempers Flare at Dallas Police and Fire Pension Board Meeting | NBC 5 Dallas-Fort Worth

Tempers Flare at Dallas Police and Fire Pension Board Meeting

Sales taxes diverted from DART supported as a fix for the ailing pension fund

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    The Dallas Police and Fire Pension Board Thursday refused to allow lump sum withdrawals from Deferred Retirement Option Plan (DROP) accounts and retirees were angry.

    (Published Thursday, March 9, 2017)

    People nearly came to blows Thursday as the Dallas Police and Fire Pension Board imposed new restrictions on lump-sum withdrawals from Deferred Retirement Option Plan (DROP) accounts.

    Pension administrator Kelly Gottschalk said the fund's current balance of approximately $2 billion leaves no excess liquidity for large withdrawals at this time.

    Members will receive base benefits and a maximum of $3,000 a month from DROP accounts but not larger sums.

    "We can't have this situation balanced on our backs," said police retiree Dale Erves. "We've given it all. We gave a pound of flesh."

    Lump-sum withdrawals were first stopped in December after a lawsuit was filed by Dallas Mayor Mike Rawlings to stop a run on the fund.

    Members were told that larger withdrawals might resume if finances improved, but the new policy approved at Thursday's meeting reduces that chance.

    A police retiree who declined to give his name had to be separated from pension board member Clint Conway by retired Deputy Police Chief Julian Bernal in a heated discussion after the decision to limit benefits.

    "I call on this board to take the action, sue the city to fund this plan," the police retiree said. "The fact that you people want to regulate like a spigot the amount of money that's taken out of here, that these people have earned all their lives, is beyond reason."

    The frustration comes as city and state leaders debate a long-term fix for the troubled fund, which is estimated to be $3.5 billion short on obligations and could be insolvent in less than 10 years.

    State Rep. Dan Flynn, R-Canton, filed a bill Tuesday that would increase contributions from the city and employees, reduce future benefits to current employees and permanently convert DROP accounts to annuities only paid in limited amounts over time.

    "It's a very complicated bill. We are a very complicated pension system. The bill is 177 pages and very difficult to read," Gottschalk said. "We have some areas we believe are of great concern to us that were a little bit of a surprise."

    One of the biggest concerns is that Flynn's bill still leaves a gap of at least $450 million.

    Options offered so far to fill that remaining gap include a so-called "clawback" on future retiree benefits or diverting sales tax money that Dallas residents currently provide to the Dallas Area Rapid Transit agency (DART).

    Dallas City Councilman Scott Griggs, also a member of the pension board, supports taking $36 million a year in DART sales taxes to recapitalize the pension fund over time.

    "It's part of the local option penny," Griggs said. "If anyone else has another source of funds, let me know, but that's taxpayer money and I think the taxpayers would like to come out and have a vote on it."

    Griggs proposed a November referendum on the sales tax option which would also require action by the Texas legislature as part of the pension fix.

    Griggs said Dallas is 600 officers short of authorized strength, partly because of pension uncertainty.

    "We've got to solve this pension crisis because the pension crisis has turned into a public safety crisis," Griggs said.

    Councilman Philip Kingston, also a member of the board, asked to have a resolution in favor of Griggs' sales tax plan posted for a future pension board vote.

    "A November election on 'Save the Pension System' by moving a little bit of sales tax, I think that's a no brainer," Kingston said. "It will instantly improve the city's bond rating. It will not substantially adversely affect DART service."

    Employee members of the pension board welcome greater taxpayer support to help fix the pension.

    "You can talk all day long about you can't afford it, you can't afford it. You look at the construction in Uptown. The reality is, maybe you can afford it," said board member Tho Tang Ho, a Dallas police representative.

    Board member Gerald Brown, a Dallas Fire-Rescue retiree, said other sources could be considered, too.

    "Chicago is taxing everything to put into their funds," Brown said. "There's water, the city sells water to everybody."

    Council members Jennifer Gates and Erik Wilson, who also serve on the pension board, were cool to the sales tax idea.

    Gates said the city's options are limited.

    "We can 'up' on just property taxes, and there's a cap related to it," Gates said.

    Wilson argued the fund is overestimating investment returns and the sales tax transfer Griggs suggests will not fill the gap.

    "It's not going to be as simple as it may seem," said Wilson.

    Mayor Rawlings and DART officials opposed the sales tax shift.

    The mayor supported reducing future benefits to retirees who received large lump-sum withdrawals in the past.

    A group led by several former Dallas mayors has launched a campaign against using taxes for a pension fix.

    The pension fund Wednesday launched its own campaign to promote public safety employees and secure retirement to help hire and keep employees.

    The four City Council members on the pension board have taken over the mayor's lawsuit to limit DROP payments.

    Though retirees left unhappy, Kingston said additional court action is unlikely at this time after the DROP restrictions imposed Thursday.

    "Today's action gave me great hope that the board is acting responsibly," Kingston said.

    The pension problems are blamed on years of risky, over-valued real estate investments that failed to return enough for generous interest promised in DROP accounts. Investments have been revalued and interest payments reduced. Current board members have also said an FBI investigation of past officials is underway.

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