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New Coalition Formed To Help Fix Dallas Police And Fire Pension Fund

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DALLAS (CBSDFW.COM) - Three former Dallas Mayors and 10 business and civic groups are joining forces to help save the troubled Dallas Police and Fire Pension Fund.

They've formed Taxpayers For A Fair Pension, and they say the goal is to guarantee an equitable pension system for all firefighters and police officers and protect city taxpayers from big tax increases.

Former Mayors Tom Leppert, Laura Miller and Ron Kirk are co-chairs of the group, and members include: Dallas Citizens Council, Dallas Regional Chamber of Commerce, Dallas Black Chamber of Commerce, Greater Dallas Hispanic Chamber of Commerce, Greater Dallas Asian American Chamber of Commerce, North Dallas Chamber of Commerce, Oak Cliff Chamber of Commerce, Stemmons Corridor Business Association, MetroTex Association of Realtors, and The Real Estate Council.

The organization also hopes to work with the Texas Legislature, which must approve any deal to permanently fix the pension fund.

Without major changes, the city has said the fund could run out of money within ten years.

On Friday, former Mayor Leppert said, "We hope this coalition becomes a voice to how important this issue is, communicate what the issues are, and hopefully be a positive force in coming up with a solution. There is too much at stake."

As part of its grassroots effort, The Taxpayers For A Fair Pension has a website, Facebook page, and Twitter handle.

The President of the Dallas Police Association or DPA, Sgt. Mike Mata, said he has concerns about the new campaign.

"I don't understand why it's necessary to create a site to dog pile on the firefighters and the police officers. We know what needs to be done. It's almost to the point where we are trying to turn the public against the firefighters and police officers of this city."

Leppert responded, "I hope that's not the case."

Dallas' current mayor, Mike Rawlings, said, "This is not for or against police and fire. We all love our police and fire."

Rawlings said he thinks the new coalition is healthy. "It really was taxpayers who've said we've really got to get through this financial crisis. We have to take care of the police and firefighters, but the taxpayers need a seat at the table."

On Monday, a mediator worked with the city, police and fire associations and the police and fire pension system board to try to reach agreement on a permanent fix.
But all parties agreed to end the talks two days later since not enough progress was made.

On Friday, Mayor Rawlings said all parties are continuing to talk.

He repeated what he told a hearing Thursday before the State Pension Review Board in Austin. "I want to negotiate with police and fire officers themselves, not the plan's board. The plan board's role is to keep the plan going, not to negotiate benefits."

For her part, Kelly Gottschalk, Executive Director of the Dallas Police and Fire Pension System said, "The pension board has to be involved. They work for the fiduciaries of the plan. We're talking about the pension here. The members of the board have been elected by the police and fire departments."

Under the city's proposal still under discussion, police officers and firefighters would receive cuts in benefits and increase their contributions to about $3.6 Billion during a 30 year period.

The city would add $190 million to the fund during the next 30 years.

In all, the city's contributions would amount to about $4.1 Billion during a 30 year period, most of it consisting of the city's retirement contributions to police and firefighters.

In Austin Thursday, Rawlings said, "At no time during the ongoing discussions between the City of Dallas and the Dallas Police and Fire Pension System have I been in support of a tax increase, which would place an undue financial burden on the backs of taxpayers. Furthermore, it is in the spirit of the fiscal conservatism of our state, I most certainly would not support imposing such a tax increase without the consent of voters."

Gottschalk said there are still two main sticking points: She said the city wants those officers and firefighters who received the Deferred Retirement Option Plan or DROP to give back $750 million. And the pension board opposes such a move. But there are questions about whether that would be legal.

As part of the bill state lawmakers are considering, the state would require the Texas Supreme Court to rule on that.

The city wants immunity from any lawsuit possibly filed by a police officer or firefighter.

"What we're really trying to avoid is we don't want another 20 year litigation out there," said Gottschalk.

If the Supreme Court found it against the law, according to Gottschalk, they would have to come up with an alternative.

Another sticking point centers around a lawsuit dating back to the early 1990's that may go to trial this spring. It involves police and fire pay, and if the city were to lose, it could cost $4 billion. Mayor Rawlings has said that would bankrupt the city.

Thus, Gottschalk said the city is hoping the state legislature will grant the city sovereign immunity, which would end that lawsuit. If the legislature decides against that, and the city were to lose the pay lawsuit, and ultimately file for bankruptcy, Gottschalk said the city has requested to stop funding retirement contributions for police officers and firefighters, a move the pension board rejects.

Gottschalk said the pay lawsuit and pension troubles are separate matters, but that the new group, Taxpayers For A Fair Pension is trying to combine them. "They're trying to blur the line for the taxpayers and the citizens between the city's larger problem, the pay lawsuits, which is the $4 billion problem, and the pension."

Mayor Rawlings has sharply criticized the pension system's past leadership and decisions, and requested the Texas Rangers to conduct a criminal investigation. The FBI has been conducting a criminal investigation into past pension board administrators for about 18 months.

But Mata of the DPA said there's more blame to go around. City council members who were appointed to the pension board by the previous Mayors, didn't regularly attend board meetings. And between 2005 and 2007, Mata said the former council members were absent from meetings between 96 percent to 100 percent of the time.

"They all had city council who were supposed to be on the pension committees making these decisions, so they either didn't do their fiduciary duty to the city of Dallas and bring up these problems to the Mayor and to the council."

Mayor Rawlings countered, "The point is, who voted themselves the benefits? Who made the decisions? The majority made the decisions to hire certain executive directors who made bad business decisions."

In its release, the Taxpayers For A Fair Pension said -

"The Pension Board adopted extravagant benefits for its members and made things worse through poor investment deals - and even borrowed millions for unduly risky investments."

Pete Bailey, President of the Dallas Police Retired Officers Association criticized the new coalition, "This is just another attempt to manipulate public opinion in an effort to allow the City of Dallas to take over a pension system that is in peril due to awful managerial decisions and what is in my opinion, negligent oversight required by statute of the City by the Mayor of Dallas through the city council members assigned to the pension board of trustees."

Leppert though said, "I hope we get beyond the point of establishing blame. What we need to come up with is a solution."

He doesn't want this issue causing any problems that could hurt the city's booming economy.

Follow Jack Fink on Twitter & Facebook: @cbs11jack

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