The Dallas Police and Fire Pension crisis worsened Thursday as trustees learned a run on the fund has shortened the time to insolvency and boosted the bailout amount needed.
Instead of the $650 million suggested earlier as a taxpayer contribution to balance the fund's liabilities the figure suggested now is $1.1 billion. Instead of being insolvent by 2030, the fund would now fall short of ability to pay promised benefits by 2027 without major changes in the fund's finances.
Members have withdrawn about $20 million a week recently from deferred retirement investments over fear of declining benefits.
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"We are in dire straits here. We need some support from the city. We cannot do it ourselves. We're in that bad a condition," said Police & Fire Pension Chairman Sam Friar.
The board discussed a series of benefit reductions and increased contributions Thursday. But that plan, which was to have solved 66 percent of the shortfall problem, will now solve only 43 percent because of the shrinking investment pool still on hand.
Police and fire representatives on the pension board expressed reservations Thursday about some of the benefit cuts.
"We're trying to stop the run on the bank," said board member Clint Conway, a Dallas Fire-Rescue captain with a Texas Christian University finance degree.
Conway said employees want 3- or 4-percent interest to keep their money in the fund.
Currently deferred retirement option plan money is receiving a guaranteed 6 percent. One change would reduce that to 3 percent.
Four Dallas City Council members also serve as members of the pension board.
"Our system is in trouble today because we were aggressive with benefits," said Councilwoman Jennifer Staubach Gates. "Why try to do it again."
Employees must approve the changes in a vote scheduled for November. Friar said pension people have been educating employees about the situation.
"They come in very apprehensive but they leave with a lot more understanding of the plan, and for the most part I think they'll vote for it," Friar said.
The board delayed final approval of employee ballot language until next week with details still being adjusted.
If employees reject the changes, the crisis would only be larger.
"Bottom line is, we need a police force and fire department to run this city and if we did not have a pension plan, I'm not sure what the result of that would be," Friar said.
Police retiree Dan Wojcik, also a former pension board member, said the current board is moving too quickly.
"This is a complicated, confusing issue, and if the board themselves are confused about it, they're not ready to put this out for a vote of the members," Wojcik said.
By comparison, the potential $1 billion bailout from taxpayers would represent half of all the city's deferred street and transportation needs. The largest figure suggested for a proposed 2017 Dallas capital improvement bond referendum is $800 million. The pension liability would require all of that and more.
"It's going to be very difficult to find this kind of money," said City Councilman Scott Griggs, who is also a pension board member. "The situation has already adversely affected our bond rating, downgraded as we saw last week. So the situation is very serious and we'll continue to work through it."
Griggs said the solutions could also wind up being decided in a court of law. Past pension plan changes have sparked lawsuits. And Griggs said a criminal investigation is also underway.
"We have been told at previous board meetings that there is an FBI investigation," Griggs said.
The Police & Fire Pension problems are blamed on a combination of risky investments in 10 past years that returned far less than expected along with benefits more generous than the fund could afford.