DALLAS -- Dallas Mayor Mike Rawlings has filed a lawsuit against the Police and Fire Pension Board.
The lawsuit was filed Monday and comes after Mayor Rawlings sent a letter to the board last week, demanding that it stop police and firefighters from withdrawing money from special high-interest accounts tied to the pension fund. Those Deferred Retirement Option Plan accounts, or DROP, are at the heart of the pension fund's problems, along with years of bad real estate investments by past leaders.
So far, more than $500 million has been taken out of DROP accounts by worried retirees in recent months.
Rawlings said he has filed the lawsuit as an individual, asking a judge to stop withdrawals from retirees immediately. He says he is using his own money for the lawsuit.
"The mayor and a lot of people have been very concerned about just how much money has been leaving the pension fund," City Manager A.C. Gonzalez said. "He thought for all the different legal constraints that are there, that he as an individual needed to take action."
The mayor's lawsuit says that, by allowing the withdrawals to continue -- they're averaging up to $36 million a week, the lawsuit alleges -- the pension board has failed in its responsibility to the fund. The solvency of the fund has been reduced by five years and if DROP withdrawals continue unabated, it will lead to a liquidity crisis within the next 90 days and force the sale of assets.
The city estimates that, as of November, 517 police and firefighters have DROP accounts containing more than $1 million. One, belonging to an unnamed first responder, has $4.3 million in it, city figures show. On average, the city estimates that the average DROP account contains nearly $600,000.
The controversy all comes at a time when the board has asked the cash-strapped city for a bailout over $1 billion. The board's position is that they legally can't stop the withdrawals, but the mayor disagrees.
The Dallas City Council will hold a briefing Wednesday where they will discuss the city's proposal and how to fix pension issues.
At a hearing Monday afternoon, Judge Tonya Parker declined to take any action to halt DROP withdrawals, deciding instead to let the pension board meet Thursday and discuss the DROP withdrawals themselves at their regularly-scheduled meeting.
If that board takes no action to limit DROP withdrawals Thursday, Parker said she will convene another hearing to determine if she needs to do it herself.
In September, the pension board convened a marathon closed-door meeting to discuss whether to limit DROP withdrawals, but emerged after several hours of discussion and declined to take action.
Pension fund general counsel Josh Mond declined to say Monday whether the pension board will, again, conduct its discussion behind closed doors at Thursday's meeting.
Read the lawsuit documents below:
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