Many concerned over Mayor Rawlings rejection of pension bill

Mayor Rawlings rejects bill to rescue pension fund calling it a 'massive taxpayer bailout'

DALLAS - Marie Tippet's husband JD made the ultimate sacrifice.

He was killed by Lee Harvey Oswald fleeing the scene of the President Kennedy’s assassination.

Now, she feels victimized again by the failing police and fire pension fund.

“I don't want them to reduce it any because if they do, I won't be able to pay my bills,” Tippit said.

The 88-year old widow joined hundreds of former and current Dallas public safety workers Monday at the state capitol for a hearing on a bill seeking to rescue the failing police and fire pension fund. They packed the hearing room and an overflow room.

Over the weekend, Mayor Mike Rawlings suddenly announced he couldn't support the bill, angering the bill's author, House Pension Committee chair, Rep. Dan Flynn.

“Anyone opposed to this bill is standing against the Dallas police and fire families and public safety,” Flynn said in his opening remarks.

Flynn’s plan has a lot of pain to go around for everyone. Among other things, it increase contributions for current public safety workers. It eliminates cost of living raises for what will likely be decades. It provides a mechanism that allows a newly restricted board to seek to claw back excessive interest payments made on special retirement accounts – a provision that retirees have promised to contest.

The fund has a $3.7 billion funding gap. It is set to go bankrupt in 10 years if no changes are made.

The mayor's main objection: a provision setting a minimum dollar amount the city must contribute to the fund. It'd rise automatically with inflation.

“Instead of the city paying on actual pay roll, the city will be making contributions on behalf of people who do not even work for the city,” Rawlings said. “The city would be contributing on behalf of phantom employees.”

He says the city had agreed to contribute 34.5 percent – minus overtime pay – for public safety workers, as well as an additional $11 million per year.

But the clause says the city will contribute either the 34.5 percent or the minimum contribution amounts set forth in the bill, whichever is greater.

Rawlings says the city had calculated it would pay about a $1.3 billion over 30 years. But with the minimum dollar amounts, he says the city would end up contributing an additional billion dollars.

Rawlings called it the taxpayer escalation clause.

“It amounts to nothing more than a taxpayer bailout,” he said.

The fund's executive administrator, Kelly Gottschalk, testified in support of the bill. She cited the many concessions made by the fund’s membership, saying the increases in contributions and reductions in benefits was much greater than anticipated.

She says the fund would still end up insolvent without a minimum contribution amount.

Gottschalk said she believes the city is widely inflating the amount of additional money that the city will be putting in because of the minimum dollar amounts set forth in the bill.

She gave an example of how not setting a minimum could send the fund on a downward spiral.

Gottschalk said during a recent pay period, contributions were down 5.8 percent largely driven by the fact that record numbers and firefighters are quitting. If that number was spread out for the whole year, she said it would be a $15 million loss.

“I think there may be another motive,”’ she told the committee.

She said she believes that they want to hold onto the money so that it gives them the money to start a new pension fund. That would leave about 7,000 people without a pension.

That prompted Flynn to ask the chairman of the fund's board, Dallas firefighter Sam Friar, what he thought about that scenario.

“Do you believe that the city wants the fund to fail and start a new one?” Flynn asked.

“I absolutely believe that their plan is for this pension to fail,” Friar responded. “Absolutely.” 

Flynn called the mayor back up to ask him about it.

The mayor emphatically denied that it was the city’s end game.

“We’ve got to work and do everything we can to keep this fund alive,” Rawlings said.

Anu Meha, executive director of the pension review board, said she believed that including a minimum contribute amount provides “some contribution stability.”

“If the floor is taken out then the contributions going into the system there would be some uncertainty about that,” she said.

In his remarks, Rawlings also reiterated his position that the taxpayers had nothing to do with the failure of the fund.

His contention is that the state legislature created a system that gave power to the beneficiaries, who in turn hired administrators who fraudulently misrepresented the status of the fund.

“Based in part on this fraud, the beneficiaries voted themselves unsustainable benefits,” Rawlings said.

Flynn repeatedly questioned Rawlings about what city leaders had done to monitor the fund’s health.

He asked if the mayor had sought to do an audit of the fund. The mayor replied that he had but that he was told by the board in 2011 that he did not have that right. He also cited a 2011 letter written by the then-board chair stating that the fund was in excellent financial condition.

The mayor told Flynn that it had taken four years to get to the bottom of the situation. He cited ongoing state and federal investigations into the apparently fraudulent statements made by prior leaders of the fund.

“It is not the Dallas taxpayers but the state that is morally and legally responsible for this mess that we find ourselves in,” Rawlings said.

Flynn responded, “And you know we disagree with you.”

“Yes,  we have a difference of opinion on that,” he said.

The mayor also made the city’s pitch that the city should have majority control of the board. As it stands now, council members are a third of the board’s membership. The new board would be a 50-50 split between the city the plan’s beneficiaries.

“Give us the majority of the board,” Rawlings said. “Don’t hamstring the board with a state unfunded mandate.”

Flynn told WFAA in an interview, that he did not expect to make any major changes to the bill. He also said that he believed he had the votes for passage and that he believed it would put the fund on a path to actuarial stability.

© 2017 WFAA-TV


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