Tension Fund

Concerns about the soundness of the city's retirement fund are buried in a political mud fight

If John Ware has brought anyone around to his way of thinking on the pension fund, he hasn't done it with subtlety. After the fight became public, Ware jumped in the ring and stripped off his gloves.

The city manager launched his public campaign on December 6 by sending a letter to all city employees, insisting their pensions are safe. Ware apologized for his silence on the matter until that date, pointing to the self-imposed gag order spawned by the possible lawsuit against the actuarial advisors. Ware said employees had been "limited to one-sided views of the [pension] board and inaccurate newspaper articles." He told the employees about the wonderful news he had received from Conrad Siegel, and described Siegel's 35 years of experience.

"There is not a funding problem with the Employee Retirement Fund. You have my personal assurance that we will continue to work to provide a retirement fund that is fiscally sound," Ware wrote.

Lest anyone miss the message, Ware sent a cover letter to all of the city's supervisors instructing them to make sure every city employee got a copy of his letter. "I am holding you personally responsible for ensuring that this memo is placed in every city employee's hands by you or your assistant director by the end of the day," Ware wrote.

Ware also pledged to council members that he would talk to Reynolds and try to change the state review board's point of view on the matter.

John Ware did not stop with city employees and the state overseers. To keep his campaign going, he also charged up members of the city council.

At a December city council hearing, held coincidentally on the day of the News editorial, some council members had their rhetorical guns blazing and aimed at Randy Stalnaker.

Before the meeting, Ware's staff had dug into the extensive worldwide travel of Stalnaker and other trustees. As chairman, Ware's staff learned, Stalnaker had flown to England, Germany, Chile, and Australia. All together, the trustees had spent $54,000 of pension fund money since 1992 on travel. It was not enough even to nick the estimated $21 million shortfall. But some of the trips had been subsidized by stock brokerage firms and investment banking houses, which could potentially receive lucrative business from the trustees. To city council members, the travel information reeked of mismanagement and possible conflicts of interest.

At the December afternoon gathering, Stalnaker was prepared to take a hit. He smiled, adjusted his tie, and buttoned his jacket when councilmember Mary Poss launched into him. Poss literally pointed her pen at Stalnaker as she posed questions. Ware, chest held high, chin jutting forward, strolled confidently behind Poss as she plugged away.

The first-term council member demanded to know why the fund had contracts with 29 different financial managers. The trustees were getting rid of 18 of those managers, Stalnaker told Poss.

"That sounds good. But that's not my question," Poss curtly cut in. "Did we possibly attend conferences where [the financial managers] might have entertained us?" she asked Stalnaker sarcastically. The insinuation was hard to miss: Had Stalnaker and the others awarded work to fund management companies on the basis of trips they were offered?

Stalnaker bit his lower lip. "It's hard for me to answer," he told Poss. "Because many of [the fund managers] were here before I came on the board."

With the advantage in her court, Poss switched into a lecturing mode. "When Mr. Ware makes his next juncture to Wall Street as he does annually," Poss said, glancing in Ware's direction, "I can guarantee your editorial will be in their file. And I think you can also safely assume that this will impact the next bond sale. This will cost the city money."

Poss scored Ware's point with the council, but Ware also delivered some hits in the press. Stories about the travel expenses appeared in the Morning News and on WFAA Channel 8.

It didn't hurt that Siegel, the consultant Ware was paying $200,000 to look over the fund's books, also offered his advice on the public-relations battle. In a letter faxed to Suhm on December 19, Siegel opined that Ware would get more mileage in the newspapers if the city manager wrote even more letters to the city employees.

Siegel also provided Ware a list of issues that might help the city manager's case, including highlighting in public that Stalnaker was seeking changes in the fund that would benefit him personally.

In early January, Ware had other fish frying. At a January 8 executive session, the council brought in its two appointees to the pension board for a review. Dan Paul, a retired city auditor, and I.M. Rice, a former sewer worker, trooped down to meet the politicians. The worldwide trips were the subject of much of the discussion, even ridicule. Councilmember Donna Blumer recalls, "They didn't have any justification for the overseas trips. One said he had been in England because they were investing in Russia. We all just laughed."

By the end of the executive session, Rice had resigned and Paul had agreed to give up his appointment in August. Stalnaker supporters felt the two elderly gentlemen had been bullied by Ware and the council. Paul didn't want to comment publicly on the matter; Rice could not be reached.

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