Was MetroTex Association of Realtors Right to Join “Taxpayers for a Fair Pension”?

Fair Pension 1

By now you must have seen the glossy brochure that appeared in mailboxes about February 1 from a group called “Taxpayers for a Fair Pension”. It is co-chaired by the former mayors Ron Kirk, Laura Miller, and Tom Leppert.

“The future financial health of the City of Dallas is now in your hands.”

Which reminds me: Leppert finally sold his Preston Hollow house and moved. Next post, stay tuned.

The campaign was a real head-scratcher for me when I first heard of it. On the surface, it looks all “Kumbaya”-ish with the union of three former mayors, the Dallas Black Chamber of Commerce, the Dallas Citizen’s Council, the Dallas Regional Chamber, the Greater Dallas Hispanic Chamber of Commerce, the Stemmons Corridor Business Association, MetroTex Association of Realtors, the North Dallas Chamber of Commerce, TREC, the Oak Cliff Chamber of Commerce, even the Greater Dallas Asian American Chamber of Commerce.

Wow, that’s a lot of “kumbaya.”

The mission behind the $5 apiece, five-color glossies is to “Salvage Dallas’ broken pension systems and “… maintain a high level of public safety for all our citizens while at the same time protecting Dallas taxpayers.” It is also to lobby the Texas Legislature “to authorize a new pension system that has the necessary checks and balances, and gives equal governing authority to the taxpayers as well as the police and fire beneficiaries.”

The first thing I thought was, wait. Aren’t those three mayors the ones who were in charge when the disastrous DROP program was born? Weren’t these dudes kind of asleep at the wheel or focused on things other than management at the Pension board?

Turns out they were not just asleep at the wheel, they were driving on fumes: not only did the council members they appointed to the board not show up to board meetings, some of these mayors didn’t even appoint bodies to fill the seats. In Laura Miller’s case, two seats were left wide open for FOUR years.

WFAA-TV’s Tanya Eiserer broke the story on WFAA last week with even more bizarre news: Laura’s husband, attorney (and former Texas legislator) Steve Wolens, works for the law firm that four City Council members are using to sue the Pension. So in a way, says Tim Rogers at D Magazine, Laura is getting financial benefit now out of something she helped screwed up.

And now I am hearing that a lot of agents married to current and retired policemen are pretty ticked at MetroTex for getting in bed with these folks. For one thing, retired DPD Kenneth Seguin believes this is all part of a plan by Mayor Rawlings (and others on the City Council) to hang them out to dry.

There is nothing “fair” about what Mayor Rawlings insists on doing in trying to strip pensioners of interest, COLA, and Benefit Supplement payments that have already been credited to pensioner accounts. He wants the pensioners, who did nothing wrong, to pay for the mismanagement of the pension fund by its former administrator and 12 trustees (which included four city council members).

Seguin says Mayor Rawlings knew about the shortcomings in the fund, but said nada. As did others.  There is also the pending lawsuit about police pay coming up in May. Both of these could end up stripping the city’s pocketbooks ($1 to 4 billion in the pay lawsuit, at least $1 billion to beef up the pension plan), but Seguin and fellow retired officers say the City has been playing games.

Now, they plan to fight back.

If you read his two letters, one to James Martin at MetroTex, the other to Texas State Senator Dan Flynn, you will actually begin to understand the almost Enron-esque complexities. Seguin says the mayor’s quest for “Sovereign Immunity” and the “clawback” features are particularly unsavory. When I asked him if the clawback could force any officers to sell their homes, he said yes – the Mayor’s plan will garnish future payments, slicing and dicing benefits:

The Mayor insists that it’s ‘his way or the highway’ with his despicable proposal of Sovereign Immunity and “Clawback.” He has at least three other options that he refuses to use in any combination: (1) a moderate tax increase, (2) infusion of money currently in the city’s financial reserves, and (3) selling of pension obligation bonds. He used the latter to solve the problem with the civilian employee pension plan, but will not do so with the Police and Fire Pension because he says he wants to use bonds for his “transformational projects,” a euphemism that most of us interpret as “more parks and bridges.”

Of course anyone Real Estate, including me, shudders at “moderate tax increase.” But what I loved about Seguin’s letter to Dan Flynn was his suggestion to have a professional money manager on the Pension board. This is exactly what I think should be done going forward, only I would place three along with the police and fire reps and MAYBE council members, though they certainly haven’t protected the City’s interests in the past.

Jump to not only read Kenneth Seguin’s excellent solution proposals, but to learn way more about the DROP program: complex, yes, but could really affect Dallas home sales…

Kenneth Seguin to James Martin on Dp Fp by Joanna England on Scribd

Flynn Letter by Joanna England on Scribd

5 Comment

  • As the Trinity River Corridor Project is unlikely to ever happen, Mr. Seguin is definitely right about transferring any fungible funds over to the pensions.

  • Thank you for this article. Seems like the little guy will get cheated and the powerful go Scott free. It’s no win here, we either cheat our first responders or we burden the taxpayers. Those who created this mess or turned a blind eye walk away.

  • Your plan to put multiple money managers on the pension board is spot on. A competent investor would have immediately objected to the flawed methodology employed over the last decade or more. And the current situation is so dire that top people should be willing to step forward and even manage a tranche of the fund pro bono for at least an interim period. Someone like Shad Rowe has actually served on a state pension oversight board in the past but apparently the politicians would not listen to him. And note the February 7 Dallas Observer article where former DPFP board member Lee Kleinman both acknowledges that the fund was attempting to employ the Yale or endowment method of money management and reveals in his comments that he still has no clue whatsoever what the Yale method actually is. Not surprisingly, the Yale endowment returned 8% annualized over the last ten years while the DPFP did not even manage 1.8%. Someone needs to answer from the resulting billion-plus dollar shortfall.

  • No Major Seguin. With all due respect, you are mis-informed.

    1. The City of Dallas saved NO MONEY at all when you went into DROP in 2002 after 26 years of service. It continued to pay 28% of your annual salary to the Pension Fund which you and you fellow employees controlled.

    2. I don’t know your pay rate when you retired. Let’s assume with your overtime it was $100,000. This means between 2002 and 2016 the City of Dallas paid $336,000 to your Pension Fund on your behalf. The Pension Fund also would have added $1,000,000 to your DROP from your deferred retirement pay.

    3. Your being in DROP saved the City NOTHING. It paid your pension fund every dollar it would have paid if a fellow officer NOT in DROP had occupied your position. It was the same.

    4. Only your pension fund promised to you $2.8MM (at 10%) to $3.5MM( with 3% COLA). This is a 17% return on the money you paid in. I don’t blame you for wanting it – I would want it to. But its not sustainable without screwing your younger brother and sister officers who make every sacrifice you did and will never see anything resembling that. Surely you can do better than justify this as “something we promised ourselves..”