No one has been sure what role the state legislature will play in any solution to fixing the troubled Dallas Police and Fire Pension system. On Tuesday afternoon, state Rep. Dan Flynn, chairman of the Texas House Pensions Committee, introduced his bill to patch the system’s multi-billion-dollar hole.
It includes an overhauled pension board, increased contributions from the city and its uniformed employees, changes to who is eligible for benefits and changes in how benefits already accrued are paid out.
In a statement, Flynn emphasized that one of his biggest priorities is getting the fund’s board out of the hands of politicians, police officers and firefighters and into the hands of financial professionals. Under Flynn’s proposal, the DPFP board, currently made up of four city council members, two police officers, two firefighters and one retire pensioner, would consist of three trustees appointed by Dallas’ mayor, two appointed by the Dallas city council and two more appointed by the Dallas city manager and DPFP’s director. The final two spots on the board would be occupied by current or retired police officers or firefighters.
“This board will be free of heavy representation of those from elected positions and those without significant business experience,” Flynn said in his statement.
Additional major changes to the plan would include increasing Dallas police officers’ retirement age from 51 to 58, eliminating future interest on lump-sum accruals in deferred retirement option program (DROP) accounts and raising the city’s contribution to the fund to 34.5 percent of Dallas police and fire payroll, per year.
DROP was a program that allowed officers who were eligible to receive pensions to retire but continue working, depositing their pension checks into accounts that collected guaranteed interest of between 8 and 10 percent. In addition to stopping any future interest being paid on the accounts, Flynn’s bill would also call for clawing back some interest already paid to DROP account holders. That would almost certainly bring about a legal challenge from retirees.
DPFP board Chairman Sam Friar said Tuesday that he can’t support Flynn’s bill.
“These provisions are not in the best interest of pension members or citizens who value the city’s ability to keep its streets and neighborhoods safe, nor do they meet the expectations of ‘shared sacrifice,’” Friar said in a written statement. “While we cannot support the bill in its current form, we remain committed to work for a solution in the spirit of ‘shared sacrifice.’”
During an interview with the Observer last month, DPFP Director Kelly Gottschalk said that she believed any pension solution including a clawback of interest already paid would violate the Texas Constitution.
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