Senate “Fixed” the Dallas Police & Fire Pension Plan: a Win for Mayor Rawlings?

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Update, 11 p.m: More details are emerging on the Senate version of the Dallas Police and Fire Pension fix that was announced today at 3 p.m. in Austin.

The Senate’s newest version gives the city longer to get the pension solvent — 46 years, whereas the Flynn version was 40 years. The City of Dallas will pay more into the system: 34.5% rather than the 27.5% currently paid on all payroll, which includes overtime. (In 2016, that was $124 million.)

The city will continue to fund the plan long term, which was apparently  a game-changer for the pension board. Gottschalk said “This moves it from a seven-year plan to a forever plan.” Dallas is definitely contributing more, but the “phantom cops” (funding regardless if the cops are there) requirement is apparently gone. From the latest reports:

The Senate’s version requires minimum contributions by the city and first responders into the fund, and requires a lump sum of $13 million from the city for each of the first five years. Contribution rates during the sixth and seventh years will depend on the city’s hiring plan.

In its seventh year, the city will look to a third-party actuary to determine the fund’s progress. The actuary will produce a report on the state of the system, and the report’s findings could lead to an adjustment of the minimum contribution rates by the city and system members as well as the lump sum amounts. If the actuary finds that the fund is not on the road to solvency, the system will find itself back before legislature to determine a new plan.

“We believe that having one person chosen by a state agency that has no dog in the race would make it very independent,” West said.

The House version also set a minimum amount for taxpayers to pay into the system. The city was going to pay either a 34.5 percent contribution rate on the police-and-fire payroll, excluding overtime, or a scheduled amount that started at more than $134 million and expanded over time. The city would also chip in an additional $11 million per year on top of that amount.

Pensions are so complicated. The creators figured the city’s contribution would grow in subsequent years anyway because of annual salary increases for police and firefighters, and probably city growth requiring hiring of more police, which will hopefully happen with this plan in place.

But the city fought the escalating amount of cash needed to pay in every year no matter how many officers and firefighters the city employs or what it paid them, the phantom cop concept.

That provision was designed to make it harder for the city to start a new pension and leave the retirees, etc., hanging. They feared city leaders wanted to start a new retirement system and would “starve” the new pension by removing overtime payments from the equation. Why did they think that? Because my ex-opponent, Lee M. Kleinman, said that’s what he would do: start a new plan and ditch the old. Not sure yet how the Senate version will keep that from happening, sure hope it does.

But the city is pouring in more money, and is getting more control:

Under the Senate’s version, the system would be governed by six people chosen by the mayor with consultation from the city council (what does that mean?) and five chosen to represent the police and fire unions’ interests. They would need to have a two-thirds majority vote before approving reductions to the city’s contribution rates, any increase in member contributions and any move to lower benefits.

 

In a 3:00 pm press conference today, there was a lot of hand-shaking in Austin, but key details in the Senate version of the plan to save the Dallas Police & Fire Pension fund remain nebulous. We are told that key provisions are settled: governance issues, city flexibility, and all plan members, including retirees, are taken care of. Amendments are on the floor being drafted for the rest.

The City of Dallas will now have 6 trustee slots on the board.

The Pension members get 5 trustee slots.

But the key is that it will take a two/thirds majority vote to put this plan out to pasture, even (it appears) when it comes to clawbacks. Senator West also said voters will be engaged in this, though it wasn’t clear how.

The members wanted to make certain this is not a switch and bait type deal, which they feared since Lee Kleinman had publicly said, on occasion, he wanted to kill the entire pension, and leave “those crybaby retirees” out to dry. Many in Austin felt the Mayor did, too. Kleinman said as much to the Dallas Morning News Editorial Board during our endorsement forum. And let us not forget the famous Rawlings letter to taxpayers asking them to attack the Flynn plan:

“I have offered time and time again for the Mayor to provide workable solutions but he has resorted to bullying and name calling while we are working on solutions rather than focus on protecting the 10,000 Police and Fire retirees, members and their families,” said Chairman Flynn. “That lends a lot of credence to the opinion of many that the Mayor just wants to take over the Plan and drastically attack benefits by collapsing the plan. Well that’s not going to happen. The city can’t recruit because they have a preference for parks over police and firemen, suggesting to everyone those officers rate below dirt and grass.  The current legislation raises no taxes and requires no bonds and I have no idea why the Mayor thinks it is so.  I suggest he stops wasting taxpayer dollars on expensive PR firms, lobbyists and lawyers, quit claiming bankruptcy is the answer and starts taking public safety seriously.”

Basically, the various police and fire organizations will now communicate to members that no one got everything they wanted, but the deal got done. And the pension will survive, possibly thrive, with a 46 year funding period. Praise was heaped way more on state legislators than anyone in Dallas, especially Dan Flynn.

Senator Don Huffines: “It’s important to live up to our iconic image of Dallas, keep the city secure in the future for taxpayers and business interests. No one got everything everybody wanted, me included.”

Representative Dan Flynn: “A monumental day for us, 2 years of work. Dallas is a premiere city, but we need to protect the 10,000 retirees. Everyone is 80% happy.”

A scant few clues came out in the limited press Q and A:

The City of Dallas gets to make sure the plan is actuarially sound. Check.

Clawbacks: hotly contested, strenuously contested. They would only occur with that 2/3rds vote,  done if only absolutely necessarily to save the fund. Good deal.

Plan participants are putting in a whopping 13.5% contribution, retirees getting half or less than half of what they were promised. Ouch.

The City of Dallas is putting in 34.5 percent vs. the current 27.5.

Whoa!

Not sure who asked the million dollar question, but, “isn’t this still a taxpayer bailout?”

Here is where Mayor Rawlings, who was really out of the picture for most of the time, did his spin dance: Yes, but the taxpayers have ownership of this now. (Those 6 reps.) They put governance in the right place. They (the taxpayers) will let us know in the future if they approve…

Which means, I guess, Mayor Rawlings is now going to have to explain to his high tax-hating constituents (me included) that the city will indeed be bailing out the pension plan. (Like I said, we will pay one way or the other.) We will just have one more person on the board, “in control”.  Thank God none of those board members can be City Council members.

Can hardly wait to see how @leeforDallas will spin this in District 11! He actually told voters at the polls that a vote for me would mean a tax increase!

Both Royce West and Don Huffines want to hire executive director Kelly Gottschalk, who said it has been something else to see a model pension plan fall so dramatically, to be able to come back and tell members, we will have a pension.

“These guys were willing to cut their benefits in half,” she said, praising her reps and retirees “Our plan has a 46 year funding period. They wanted 30 years originally. It must be monitored closely. What we did is put a floor in the bill until year 7.”

Again, details still fuzzy, but it’s looking like a floor means that the city of Dallas is committed to funding the pension with more tax dollars for at least seven years, to get it healthy. We will be taking it’s temperature a lot.

So kumbaya down in Austin today. Mike Mata and Jim McDade even shook hands with Mayor Rawlings, and everyone politely thanked everyone as we do in our civilized society.

Of note is that Lee Kleinman, legislative liaison, was nowhere to be found.

Of note is the efforts of Lee Kleinman and Mayor Rawlings (from bad advice) to crush this plan and steamroll the police and fire did not work. They tried to put a happy face on it today, but there still is no deal. Looks like the retirees have no leverage other than at the courthouse, which may be why their representative did not even bother to thank Mayor Rawlings. I sincerely hope they get taken care of.

The kinds of things the Mayor was saying hint that he may be coming home with his tail between his legs: we have to make the pension fund solvent to attract and retain our first responders and for us to grow as a city. He said “we need this bill to grow.”

No kidding, that’s what I was saying all through my campaign. We are paying not to bail out the pension, but for 20 years of poor fiscal leadership. We are paying for leaders who vote to waste $4 million on fake white water rapids in the Trinity River.

He said thank you to the retirees, “we are in a place where we can support them”. At fifty percent.

“I’m not thrilled with everything,” said the Mayor, “but it’s about the city coming together.”

Yep, the Mayor got beat. Kleinman was AWOL because he hurt the process more than he helped with his grand goals of crushing the pension into non existence.

Dallas Police Association president Mike Mata showed great leadership:

“This cloud over our head hampered our ability to hire at all. We will go home and help citizens understand this is a good deal. We are solid for years to come. This is our starting place.”

I just wish elections were this Saturday!

 

 

One thought on “Senate “Fixed” the Dallas Police & Fire Pension Plan: a Win for Mayor Rawlings?

  1. Thanks again for your strong support. I hope this all works out. Still a lot of unanswered questions.

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