The City of Dallas has released its solution to help bail out the struggling Dallas Police and Fire Pension System. Its impact and details are still being digested by city officials and retirees.
By now you've heard the disturbing news and seen the images. Dallas Police and Fire retirees have been lining up to pull their money out of the pension fund, the so-called run on the bank.
"$160 million has gone out this week over the 500-million that's gone out before that," said Frederick Frazier, President of the Dallas Police Association. "Every time that money goes, that's the money we need to keep the thing stable."
Frazier was at City Hall Wednesday to hear the City Manager's proposal to bail out the failing Dallas Police and Fire Pension Fund, at risk of going broke in 10 years if something doesn't change fast.
Being blamed are risky investments, generous interest rates, huge cost of living adjustments which have all combined to create today's crisis. "The taxpayers are going to have to step up, the pensioners are going to have to step up, the existing employees are going to have to step up, it will be shared sacrifice," said Lee Kleinman, Dallas City Councilmember.
The pension fund bailout plan being proposed by the City would take 30 years and cover a $3.5 billion budget shortfall.
While the city would kick in an extra $11 million a year for benefits, it proposes to stop making a three percent medical supplement contribution, cap the cost of living adjustment at two percent, eliminate the eight to ten percent guaranteed interest being paid on delayed retirement or "DROP" accounts.
The most controversial proposal would be to force those contributing to DROP pay back at least a portion of the interest they've earned through a reduction in future payments.
Mayor Mike Rawlings said retirees should be able to handle the changes without too much problem. "Hopefully they've invested their money well and didn't go to Vegas and put it on the wrong color," said Rawlings. "I mean if they didn't, they are going to be in great shape, OK?”
There are still questions as to what fiscal impact this will have on the city's budget or taxpayers and it still must be voted on by the City Council then approved by state lawmakers.
The Police and Fire Pension System Board meets Thursday and they are at least expected to halt withdrawals. If they don't Mayor Rawlings is asking a judge to do it by Friday.