Dallas Police And Fire Pension Board Chooses Plan To Save Fund
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DALLAS (CBSDFW.COM) - Monday morning the Dallas Police and Fire Pension Board voted unanimously to back a state lawmaker's plan to fix the money-troubled fund instead of a plan advocated by Dallas Mayor Mike Rawlings.
After the 9-0 vote, board members said they hope to work with State Representative Dan Flynn, R-Canton, to make changes to his plan. Flynn is the Chairman of the House Pension Committee.
Timing is crucial because the fund could run out of money in about 10 years if major changes aren't made.
Any solution must be approved by state lawmakers before the legislative session ends in late May.
For weeks now, the city and the pension fund board have met to try to come to terms on a long-term fix, including Valentine's Day, but so far, they haven't been successful in reaching a consensus.
There are distinct differences between Rep. Flynn's plan and the one developed by the City. Under Flynn's plan the city would contribute an extra $22 million each year to the fund. His proposal would also change how retired police officers and firefighters receive their money: It would amortize all of the money to be paid out to each retiree based on the average life expectancy, now 78 years of age. Retirees would receive an equal amount of money each year.
So for example, if the retiree is 74, he or she would receive all of their money in four years (by the time they turn 78,) in equal monthly payments. If the police officer or firefighter is 50, he or she would receive all of their money in equal monthly payments over a 28-year period.
Under Flynn's plan, the retirement age would rise to 58 years of age from 51 for those who were hired before 2011 and from 55 for those hired after 2011. Some board members, police and firefighters believe that's too old and favor lowering that to age 55.
But the proposal falls short by $450-$600 million from being paid for within 30 years, which is the normal time period. Instead, it would take between 40 and 48 years to pay for Rep. Flynn's plan. His plan doesn't mention the back-pay lawsuit filed by police officers and firefighters against the city decades ago.
In contrast, Mayor Rawlings had said his plan would fund the pension system in 30 years. Under his plan, the city would contribute an extra $18 million each year to the fund.
Retirees would face more than $3.5 billion in benefit cuts and higher contributions. That includes $720 million in what's called "clawbacks" or equity adjustments from the Defined Retirement Option Program or DROP payments.
Those who received DROP would also have to give back the 8-percent interest they received.
If it's in their account, the money would be taken out. If they didn't have that money in their account, then it would be taken out of their pension payments until repaid fully. One retiree called that part of the plan "illegal and immoral."
Years ago, the city developed the DROP payments as an incentive. Police officers and firefighters were allowed to officially retire, but continue working. The city guaranteed an 8-percent interest rate every year -- even in down financial years. That's what created financial problems for the fund.
Some board members rejected the Mayor's plan saying that ship sailed and called it insulting.
Follow Jack Fink on Twitter & Facebook: @cbs11jack
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