Dallas Leaders Unite to Spar With Legislature Over Police Pension Fix

Dallas officials were united Monday. Not about what to do about the city's woebegone police and fire pension system. There's still plenty of arguing to do about what to do with the $3.6 billion unfunded liability that could threaten the fund's liquidity in less than a decade.

No, Dallas Mayor Mike Rawlings, Dallas City Council members Lee Kleinman and Scott Griggs and former Dallas Mayor Tom Leppert joined together Monday to criticize the amended version of a statehouse bill to fix the pension problem.

The city officials lambasted Texas State Representative Dan Flynn's House Bill 3158 for taking too much control of the pension fund away from the city and unfairly burdening Dallas residents. “The citizens, the taxpayers, had nothing to do with the failure of this fund,” Rawlings said during testimony in front of the Texas House Pension Committee.

As amended by the committee, Flynn's bill would take control of the Dallas Police and Fire Pension System's board out of the hands of the city and hand it to retired police and firefighters. As written by Flynn, the bill would've given city employees a clear majority of spots on the board. The committee version of the bill gives the city five seats, police and firefighters five seats and allocates one seat on the board to be chosen by consent of both groups.

Rawlings said that taking control of the fund away from the city will make it vulnerable to the types of risky investing that have led to the current threats against the DPFP's solvency. According to Rawlings and Leppert, current state law left them without recourse against the actions of former DPFP director Richard Tettament, who involved the fund in real estate investments that have been roundly criticized by both city officials and the current pension board. The board lied to him, Leppert told the committee, and that's why he didn't seek help from the legislature.

Flynn testily told the mayors that they should've sent better watchdogs to sit on the pension's board.

“It was your responsibility to be sure you did have competent people serving in it,” Flynn said.

The mayors also criticized the financial component of Flynn's bill, which would require the city to make escalating payments to help the fund based on proposed new officer hires by the Dallas Police Department, regardless of whether or not the department actually hires the new officers, eventually increasing the city's annual contribution from 27.5 percent of DPFP members' annual salaries to 34.5 percent. Rawlings called the bill a "taxpayer bailout" of the fund. Griggs, who sits on the DPFP board in addition to being on the City Council, called the increasing payments a "Ponzi scheme."

"The escalator is a Ponzi hiring scheme. The committee substitute proposes saving the pension system by paying benefits to its beneficiaries from city contributions paid to an ever increasing number of uniformed officers, whether hired or not hired," Griggs said on Facebook. "This replaces the Tettamant scheme, which created the problem, with a Ponzi hiring scheme as a solution. That's not the answer."

Griggs, along with his board and council colleague Philip Kingston, has proposed that the city shore up the fund by contributing 1/8th of the sales tax currently sent to DART to the pension fund. The city, through Chief Financial Officer Elizabeth Reich, has suggested an alternative retirement plan for police and fire fighters should the fund fail.

Sam Friar, the DPFP board chair, told the committee that the bill isn't perfect, but said that he and the DPFP leadership supports the bill. Dallas' uniformed employee association also expressed support for the bill at a press conference before the committee hearing, despite the bill's plan to convert lump sum deferred retirement option program (DROP) payments to annuities. The DROP program previously allowed police and firefighters of retirement age to officially retire but continue working while watching their pension payments grow at guaranteed interest rates of 8 to 10 percent.

“The guys working today, we’re taking a cut. We know that. I’m willingly taking a cut to my pension to save the overall fund,” Dallas Firefighters Association President Jim McDade said.

At the end of the hourslong hearing Monday afternoon, the committee left the bill pending, meaning it is still several steps away from getting a vote in the Texas House, much less becoming law.