Maybe there was a line in the sand once between people who thought the Dallas Police and Fire Pension Fund was well run and those who disagreed. That line has disappeared under a whole bunch of footprints.
In fact, two full years have passed — dating from March 2015 when Kelly Gottschalk took over as the new (from outside) director of the fund — since anybody on any side of the pension fund crisis tried to say the pension fund was managed the right way before Gottschalk. Everybody gets it. It was not.
State Rep. Dan Flynn, Republican of Canton, chairman of the House Pension Committee and whip on the bailout bill now getting hammered out in Austin, told a hearing this week: “The reason we have to fix this plan is that the Dallas Police and Fire Pension is considered one of the poorest governed plans in the United States.”
The blame goes all around the campfire circle. If anything, the history of sloppy management and fiduciary misfeasance at the pension fund is a perfect mirror of the very same picture we see now at City Hall on issue after issue. Absence of financial controls, absence of proper audits, absence even of written policies to tell city employees what their jobs are and how to spend the money: Those are the long-term hallmarks of Dallas City Hall under the city manager system, not including the new guy who just got here from another city. He just took over as city manager and so probably isn’t guilty of anything serious quite yet.
The city and the fund are bonded at the hip and in their shared brand. The Dallas Police and Fire Pension Fund carries the official seal of the city over its name along with Dallas police and fire badges. You can’t say “Dallas” more clearly than that.
So are you and I asked to believe there is no connection? Are we supposed to believe the mirror image issues at the pension fund and at City Hall are totally independent of each other and have no causal link? It’s just a coincidence? Isn’t that exactly the kind of slippery line you’d expect from people who allow things like this to happen in the first place?
A new more important line in the sand was drawn clearly this week in the Flynn hearings. Over the weekend, Dallas Mayor Mike Rawlings had texted Flynn saying he was withdrawing support from Flynn’s bill as it is currently marked up because it will cost taxpayers a billion dollars more than Rawlings thought taxpayers were going to have to kick in to save the fund.
And, listen, Rawlings is not the Lone Ranger on money questions. The line in the sand I’m talking about is not really about specific formulas. Some people on the other side of the pension issue from Rawlings also have expressed skepticism about specific aspects of the bill. City Council member Scott Griggs even calls portions of the bill a “Ponzi scheme.”
Here is the real line, the important distinction. Griggs’ position from the beginning has been that the pension benefits, savings and basic life security of retired first responders must be guaranteed, one way or the other.
The mayor, who says he’s defending taxpayers or defending the city’s ability to do “transformational projects” or defending the business community, talks about conditions that seem to include at least by inference what Gottschalk once denounced as the “ice floe” solution.
The ice floe is this. Let’s say things don’t work out right. The taxpayers can’t pay their share. The pension fund doesn’t claw back benefits aggressively enough from already retired members. It’s too bad, but it just doesn’t come together. So the fund craters. The retired cops and firefighters are screwed. Really screwed. Life screwed. Retired cops and firefighters get no Social Security, because they are public employees. So if they lose both their pensions and their savings, they are truly and actually destitute.
Let’s say it was this guy’s fault, that guy’s fault, some people didn’t dot their I’s and cross their T’s, oh, and it’s a big shame, but there you have it. The cops and firefighters are screwed. School of hard knocks. Shoulda been rich.
The position of Griggs and council member Philip Kingston, both of whom are also members of the pension fund board, has been that the cops and firefighters cannot be screwed. That simply is not an outcome that we can contemplate or allow to happen under any circumstances no matter how we got where we are today.
It seems pretty damn obvious to me. After you screw your own cops and firefighters so all the good ones leave town, what is your Plan B? Let’s see. Stop having crime and fires? Oh, no, I got it: Fight the bad guys and the fires yourself. I’m already looking at Plan C — change my name and move to Ohio at midnight.
And, listen, in their roles on the pension board, Griggs and Kingston have been anything but giveaway airheads. They have taken some tough votes that the rank and file did not like, including shutting down certain withdrawals to stop a run on the bank.
The line in the sand is this: Griggs and Kingston have insisted on a solution that does not allow even the possibility of leaving retired Dallas police and fire officers destitute, betraying a solemn moral obligation at the very foundation of civil society.
If the taxpayers cannot pay more in property taxes to salvage the pension fund — if Rawlings is right and that dun letter would be too painful — then Kingston and Griggs have said we must use other money that we already have.
They say the city should take one-eighth of the sales tax revenue the city now pays to the regional transit agency and redirect that revenue to a public safety trust fund to support the pension fund. Fort Worth does it, except that they give four times more of their sales tax revenue to their own public safety fund.
The mayor and his group have objected strongly to the sales tax diversion, saying that it’s robbing Peter to pay Paul, that we need mass transit, that it’s good money after bad. Just for the sake of argument, let’s agree that all of those points are worth discussing.
Then what? What is the mayor’s other idea? How does he plan to make absolutely certain that the city will never fail to meet its promise to provide a secure retirement to its public safety officers? Without that ironclad guarantee and a clear plan to make it happen, all the other issues, the problems, objections, finger-pointing and so on amount to circumstances under which the pension fund could be allowed to crater.
What Kingston and Griggs are saying is no crater, no how, no way. In what the mayor says, I hear crater, maybe.
The last time I looked at the Flynn bill, which was yesterday, it still had this language in it:
“(The) city is required to pay only the contribution amount described by Subsection (d)(2) of this section if the most recent actuarial valuation at the time the payment is due shows that with that contribution, the total contributions to the pension system are sufficient to amortize the unfunded actuarial accrued liabilities of the fund within 35 years, as confirmed by the State Pension Review Board.”
That’s the good-money-after-bad argument. In isolation, it makes sense. If the pension fund continues to be run badly, why should the taxpayers keep pouring in money? But the trick is that this provision is not isolated from other elements of the bill. In fact it’s hard-wired.
The bill, if implemented as written today, would leave a solvency gap of as much as $500 million 35 years from now. Take a $500 million solvency gap, hook it up to that pull-out provision, and you don’t just have the possibility of a crater. You have a road map for it.
Griggs and Kingston aren’t saying we should throw good money after bad. They’re not saying we should burden the taxpayers with new taxes. Their formula, using one-eighth of the 1-cent transit sales tax, provides that there will be no funding gap, therefore no argument for pulling plugs and no new burden on taxpayers.
Of course the fund has to be better run. So does City Hall. Kingston, Griggs, Mark Clayton, Adam Medrano and Sandy Greyson are the audit party of the City Council, advocates for new tougher standards and auditing citywide. They all are optimistic that the new city manager will help them put those policies in place.
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It’s the mayor and his group on the council who are the can-kickers. Pension fund in trouble? Kick the can. Give yourself some wriggle room. Maybe you can get out of it later. Hey, not your lookout, man. Shoulda been rich.
Griggs said on his Facebook page this week: “We must create a Public Safety Fund with a small portion of the DART penny to honor our obligations and promises to our officers and provide public safety in the future.”
The mayor told the Flynn hearing, “This bill demands taxpayers pay an additional billion dollars. That is why I am against this. Under this bill taxpayers are made to hurt the most, far more than I agreed to, far more than taxpayers deserve.”
We all got here together. This is a communal failing. Think of it as family problem. It’s not a question of who deserves. There is no deserving in it. Only responsibility. Under the Kingston and Griggs plan, any cratering of the pension fund is unthinkable. Under the mayor’s approach so far, it’s at least thinkable. That’s the line in the sand.