Dallas Mayor Pulls Support For "Massive Taxpayer Bailout" Of Police Pension

Tyler Durden's picture

Dallas Mayor Mike Rawlings has finally reached his maximum willingness to throw taxpayer dollars at the Dallas Police and Fire Pension (DPFP) system and has pulled is support for a bill that, if it passes, will undoubtedly prove to be yet another futile effort to save the system from insolvency.  Despite support for the original legislation introduced by Dan Flynn, chair of the pensions committee in the Texas House of Representatives, Rawlings apparently took issue with a last minute addition to the bill that would have taxpayers fund the pensions of "phantom employees" based on a target Dallas police force of 3 officers per 1,000 residents.  Per ABC:

The clause sets a baseline number of officers and firefighters. In the case of police, that’s three officers per thousand. The clause would also automatically assume that a certain level of raises given.

 

“Basically you’re paying on phantom employees, not real employees,” Rawlings said. “We just can’t enter into an agreement with that degree of commitment for the city. No business would do it this way. We cannot find another pension fund in American where someone pays into a fund based on future employees. It’s just not done and it should not start here in the State of Texas.”

 

“This is the most taxpayer unfriendly poison pill that I’ve seen in this bill,” he said. “I’m not going to swallow this pill.”

Frankly, not wanting to spend taxpayer dollars to fund the pensions of officers that don't even exist just seems selfish, Mike!

As we reported previously (see "Dallas Police Pension Board Approves Benefit Cuts; Asks For More Taxpayer Money To Avoid Collapse"), legislation to save the DPFP was introduced a couple of months ago by Dan Flynn.  Flynn's bill called for Dallas taxpayers to contribute 34.5% of police and firefighter salaries each year into the failing pension system, up from 27% in 2015, plus an incremental $11 million per year.  In total, the adopted plan was expected to cost Dallas taxpayers an extra $22 million per year.

That said, the plan also called for pensioners to grant concessions, including the following:

  • Increase in retirement age to 58 from 55
  • Increase in employee contributions to 13.5% of payroll from 8.5%
  • Elimination of COLAs in the near term
  • Elimination of exorbitant interest payments made on employees DROP accounts

Of course, Flynn was appalled by Rawling's opposition to funding the pensions of fake employees and took to twitter to blast his decision.

 "I am deeply disappointed that the Mayor is not in support of the Legislation that will save the Dallas Police and Fire Pension.  Dallas's own website says how much they are committed to provide and now they back out over a provision that has always been in the bill since the day it was filed and want to hurt families more. I simply won't allow it. 10,000 Police and Fire retirees and active members and their extended families will be damaged by this stance and we hope the Mayor thinks better of it."

 

Meanwhile, Rawlings also expressed opposition to the current governance set out in the bill as it gives 50% control to the city and 50% to public safety workers.

“The thing that’s really concerning to me is that retirees say Dallas promised us this money, ‘give it to us,’” he said. “Dallas didn’t promise the money and if you want us to own the problem,… Dallas needs to have the right governance to do that.”

 

He noted that when he first became mayor in 2011, he sought to have the pension fund audited in the face of questions about the financial stability of the fund.

 

“They said you have no legal authority to do that,” he said.

 

The mayor and the city’s position is that police and firefighters voted themselves excessively generous benefits, and that the fund’s leadership hid the extent of the fund’s troubles from the membership for years.

But don't worry dear pensioners, we're sure you'll end up getting your taxpayer funded bailout...after all, there is no problem too large for taxpayers to solve.

* * *

For those who aren't familiar with the DPFP fiasco, here is some background on how it ended up in its current predicament.

Just over a month ago we wrote that the Dallas Police and Fire Pension Fund was on the verge of collapse after a series of shady real estate investments resulted in massive markdowns of pension assets, the ouster of the fund's CIO and an FBI raid of the fund's largest real estate investment manager (see "Dallas Cops' Pension Fund Nears Insolvency In Wake Of Shady Real Estate Deals, FBI Raid").  We summed up the fund's dilemma as follows:  

The Dallas Police & Fire Pension (DPFP), which covers nearly 10,000 police and firefighters, is on the verge of collapse as its board and the City of Dallas struggle to pitch benefit cuts to save the plan from complete failure.  According the the National Real Estate Investor, DPFP was once applauded for it's "diverse investment portfolio" but turns out it may have all been a fraud as the pension's former real estate investment manager, CDK Realy Advisors, was raided by the FBI in April 2016 and the fund was subsequently forced to mark down their entire real estate book by 32%Guess it's pretty easy to generate good returns if you manage a book of illiquid assets that can be marked at your "discretion". 

The rampant fraud at the DPFP left the fund over $3BN underfunded and its board of directors with no other option but to seek a $600mm infusion from taxpayers to keep the fund afloat.  Even worse, a review of the pension's financials revealed $2.11 of annual benefit payments to members for every $1.00 contributed to the plan by members and taxpayers (mostly taxpayers)...the typical pension ponzi whereby plan administrators borrow from assets reserved to cover future liabilities (which are likely impaired) to cover current claims in full.

DPFP

 

Well, it seems as though Dallas police officers are catching on to the ponzi and rushing to withdraw retirement funds as quickly as possible before the whole system goes bust.  As reported by a local ABC affiliate, Dallas police officers are retiring at a record rate and opting for full cash withdrawals of their pension benefits as opposed to equal monthly distributions for life (apparently they don't think the fund will be around long enough to pay them for very long).

But the pension fund is in trouble and in danger of going bankrupt. That's causing some officers and retirees to begin withdrawing their retirement funds and rolling it into their 401Ks.

 

News 8 has learned a that one assistant chief recently withdrew more than $1 million, and sources say nearly $300 million has been withdrawn throughout the department.

 

"We are in a serious situation and I think everyone needs to be concerned right now about where we are and where we need to go to get out of this."

DPFP board chairman, Sam Friar, was apparently worried enough about the "run on the bank" exposing the pension for the ponzi scheme that it is, that he decided to send a letter to members urging them to "not act rashly and without full information."  The pension board also voted to stop allowing current police officers to withdraw the cash value of their pensions and are considering further measures that would also restrict withdrawals by retirees. 

The panic that has set in forced the chairman of the pension board Sam Friar to issue a letter to members.

 

"I would strongly urge all members not to act rashly and without full information," he wrote. "You may make decisions that, after all the changes are made, are not in your best interest."

 

The board was so concerned it voted to stop current officers from withdrawing any money from their pensions, and sources say the board will soon vote to no longer allow retirees to take their money out.

 

"This may be the only way the pension can limit the cash outflow because we are in a bad situation that right now the existence of system is at stake."

Alas, the threats to restrict withdrawals of retirees probably didn't work out the way Friar expected as it has set off a wave of early retirements.  According to NBC, for the first two weeks of September, 21 Dallas police officers retired when only 14 retirements were expected for all of August and September. 

Through the first two weeks of September, there have been 21 Dallas police officers who retired.

 

Multiple sources told NBC 5 that commanders are bracing for many more retirements over the next two weeks as well.

 

The Dallas Police Department did not foresee the volume of retirements this month.

 

In early August, Deputy Chiefs told city council members in a presentation that they projected 14 retirements between Aug. 9 and Oct. 1.

Alas, while Dallas police and fire fighters may endure some short-term pain, as their pension ponzi is revealed for all to see, we suspect that the real losers, as per the usual, will be taxpayers who will ultimately be forced to pony up whatever amount of money is required to keep the whole farce going just a little longer.

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DontGive's picture

Hahaha. Pow!

Smells like a bank run. Or is that the stench of pork cooking?

"and sources say the board will soon vote to no longer allow retirees to take their money out."   <- fail

Creepy_Azz_Crackaah's picture

Save and retire like the rest of us without MASSIVE government pansions - paid for by cutting non-government people's retirement (taking from them).

Manthong's picture

3 officers per 1000 residents.. is Dallas in the US or in Iraq?

Retire at 55?  I guess it must be in France.

besnook's picture

retire with insurance!

Giant Meteor's picture

Worth it's weight in gold, as long as it "holds out."

MagicHandPuppet's picture

Let them scrape by on "social security" like the rest of us... until that's kapoot too... then they can eat bugs and dirt with the rest of us who do not save for the future.  It's a simple concept really.  This problem does not warrant  pointing a gun at the "public" and stealing their hard earned savings from them only to hand it over to people who are better off.

Every "Public" pensions is a crime against humanity.

Twee Surgeon's picture

If they come outside of my house on a Saturday night and it is a Cold evening, they might be able to catch the Steam Off of my Piss.

Other than that, I actively work to make sure these people get not a fucking thing from us, as do my Neighbors (Mostly. Calpers Commies in the Hood.)

Racketeers need to fuck off. Inbred treasonous ridge runners. Steam off my Piss? Not if I can help it.

Im tired of the Heroification of Police, it just ain't so.

99% fat bastards hiding in bushes with a license to kill. They give not one fuck about the Neighbors.

D Nyle's picture

Civil forfeitures, they will now take everything you own for a speeding ticket to pay for their retirement

 

old naughty's picture

Rawlings' "drop dead" ...

same as Ford's "Drop dead"?

is this sychronicity?

NoDebt's picture

Can't they just find the money they need with some more civil asset forfeiture?

 

wildbad's picture

if you look at the sacrifices, they were all to be imposed on the potential beneficiaries, not on the companies which ran this fund into the ground. no penalties there, no risk there. they take it all off of the top before a cent in benefits will be paid out.

not that any kind of investment based fund can operate in a zero interest environment. and not that the pension ponzi was not oversold as bait to pull the workers in.

here, in germany, the government bumped up the retirement age two years without ANY feedback from unions or workers or inustry. only the insurance companies had input and the internal socialist bookkeepers.

against all contractual agreements , they simply change the rules.

anyone who decides to play is a loser by default

dfwpike's picture

Perhaps the city of Dallas should just print more money. Problem solved ;-)

Mr Blue's picture
Mr Blue (not verified) dfwpike Apr 4, 2017 7:49 AM

I'm making over $7k a month working part time. I kept hearing other people tell me how much money they can make online so I decided to look into it. Well, it was all true and has totally changed my life. This is what I do... http://bit.ly/2jdTzrM

Giant Meteor's picture

I hear ya, and it seems like pain is comin too. On the other hand, how is it all made possible eh?

Last check, what was the % of folks A: On some sort of direct transfer payment, you know, many obviously not counted in the UI. And then add them with active .gov employees ... Someone has the number., maybe they can can chime in. Hell, why just the national security employment itself ..

Then of course there is the military, and in all cases, think of the overhead!

And we have not even gotten into "retirement" yet ..

Ah yes, we were talking state and local.  Let me recalibrate ..

divingengineer's picture

Public pensions did fine for 100 years when you can make 8% on an investment.
Now you'd have to bundle subprime loans of people with credit so shitty that they don't even have a credit score to make 1.5%
Hint- I'm not kidding.

The Federal Reserve has killed almost every pension in the country.
How much is enough for those cocksuckers?

nufio's picture

i  will put down money that the pension fund manager has already moved out of dallas to let the cops fight the taxpayers.

GreatUncle's picture

The taxpayer money used to support the sublime (subprime) shit is instantly destroyed = a malinvestment and in reality  odious debt.

 

BarkingCat's picture

maybe someone should start explaining this to all the cops and teamsters and long shoremen and other roughnecks.

The members of the FED will not be able to buy enough protection to keep themselves alive.

 

Anopheles's picture

Retire at 55 is also Greece.  Or I think Greece used to be 45.... 

Creepy_Azz_Crackaah's picture

Aren't some police forces 20 years for retirement?

Jimmy Jimmereeno's picture

Yes, just like so-called firefighters.  In my community, speaking only about the so-called firefighters (whom I know but I don't know police), there is an active intramural forceful philosophy that once a union member has logged 20 years, he maxes his overtime for a final year to thus guarantee a 6 figure retirement and then makes way for younger recruits.

I use the term "so-called firefighters" because here the percentage of call-outs is .01.  By that I mean that out of every 100 calls that require a crew on one or more firetrucks only 1 is to actually fight a fire.  I assume that the numbers are pretty much the same nationwide:  so-called firefighters do not fight fires they do other stuff that any private enterprise could do for a much lower cost to the citizenry.

techpriest's picture

Speaking of Dallas, they use the fire trucks as a barrier on highways during a traffic accident. One of the road construction trucks with the special impact bumper would be enough, and would cost less, in 99% of situations.

NoPension's picture

Professional very highly paid truck washers.

The Gun Is Good's picture

...But but but pensions are needed for public sector jawbs... as an incentive to attract the most qualified, competent, talented, hard workers !!!! /sarc/

BarkingCat's picture

Honestly I wish I had known how great of scam a job as a firefighter is.

I would not have wasted my time in college getting a degree so that I could stare at a computer screen for the rest of my working life.

I would have probably retired at 42 and enjoy the easy life.

divingengineer's picture

With the National Fire Protection Act and the National Electric Code we have cut the number of house and business fires dramatically.
It's a great accomplishment, now lay off some firefighters.

new game's picture

i know someone with three pensions. ss, fire, and public employee. 3, yup, sitten good for all that hard work. (five counting his wife)

that is the other side of the equation. overpaid union jobs with mucho sit around tyme on the public payroll. oh, and benifits you ask? yup the best. and matching 403 or simular, yup again, up to 5 percent.

is this all going to implode? how can it not? maff and demographics...

Jimmy Jimmereeno's picture

The premise here, and I am guessing that it is false, is that X police per 1000 residents deters crime. 

Other comments here suggest a workable alternative:  an armed citizenry.  Where I live, an urban area of about 365,000, most of the crime other than petty B&E, assault and DUI is concentrated in where the gangs live and operate.  It's sort of like Chicago:  the crime is gang-on-gang: drug dealer-on-dealer; and black-on-black-the last for whatever reason.  Those causes and their locations do no require, for example, 3 cops per 1000 population.

NoPension's picture

Hey! I'm 55 this year.....somebody pay me!

Oh, that's right...I didn't choose a career as a hero. I just worked my whole life, since 18. Oh, well.....

Oh....and by the way...I've got fucking ZERO use for a cop...ever.
Firefighters....let it fucking burn...that's what insurance is for.

goober's picture

What a serious bad joke these emergency services guys are and how they have massively cheated the taxpayers their entire lives one way or another.

Not long ago I was travelling down I-5 in Portland and came upon a traffic jam. It was a guy and his wife pulled over on the freeway and 2 EMTs, a Sheriff, 2 staters and 2 local police as well a fire truck to attend to a guy who thought he was having a heart attack and it said on the traffic radio channel that he had a severe case of heart burn or acid reflux ? WTF is wrong with this picture ? How much did it cost for these ass holes to all show up so they could fill out a response report as if they had actually accomplished something that day ? Fucking insanity here in USSA today just a different flavor of waste and fraud of your dollars !

Fat guy eats something and 7 to 10 emergency guys show up with almost million $ in equipment to do what ? Phck em, I do not want to pay for this shit any longer. Just catch criminals and prosecute them and put out fires,  nothing else. You know, real events ?  

http://www.downtoearththinking.com/what-is-normal-what-is-reality--.html

gregga777's picture

I hope that your savings are not where the banking gangsters and/or CON Street Swindlers can steal your life's savings.  Because they will whenever given the opportunity.

 

GreatUncle's picture

And why the electronic monetary system is ideal for them ... it never leaves their posession and they watch it 24/7.

Do to well ... pooof ... it is stolen.

alfredhorg's picture

Yes.  If a janitor can save and invest his way to $8 million, then anyone can do it:

https://howibeatgold.wordpress.com/2017/03/27/janitor-amassed-an-8m-fort...

MAAAHM's picture

Texas, It's like a whole other country.

 

zerohedge website has become click bait when you can't even log in with out adjumping.

SubjectivObject's picture

 

Frankly, not wanting to spend taxpayer dollars to fund the pensions of officers that don't even exist just seems selfish, Mike!

(due to the public nature of this editorial reportage) "<sarcoffagus>" please.

directaction's picture

How about hand the cops no pension, just like the rest of us get? 

Creepy_Azz_Crackaah's picture

Exactly.  Government employees are the 1%.  Able to live lives of luxury, not having to worry about income, or health care, at the age of 40. It all needs to abruptly stop.

Omen IV's picture

why should any government employee have a pension?

divingengineer's picture

Why should any worker not?
Why was it so easy to do up till now?
Why is it now all of a sudden impossible?
Fed and neg rates, that's why.
You are blaming the wrong people.
The guy who goes to work every day is not the problem.

Playtime&#039;s Over's picture

Blaming the right people as far as I can see, the fed crooks and those addicted to the public teet?  I am guessing you have your application in for the academy?

Playtime&#039;s Over's picture

The public teet is always easy until it ain't........Boom.  Why all of the sudden?  You sound like a grade schooler. This took a long time to layer on the bennies and fraud.   I see the post correctly blaming the right people as far as I can see, the fed crooks and those addicted to the public teet?  I am guessing you have your application in for the academy?

BarkingCat's picture

wrong. there should be no pensions and no social security.

That money should instead be given to the employee in his or her paycheck.

They can save for their own retirement like it has been since the dawn of time.

If not then you work until you die.

Pensions and social security just give the ability for various parasites to get some skim of the top.

 

Alpacanio's picture

Awww the heard of sheepdogs are all runnig out the same door. Same thing that will soon happen too the Sheep and their retirements, 401K, savings etc...

 

Yen Cross's picture

  ZIRP has a funny way of exposing the GRAFT!

Giant Meteor's picture

Apparently, and I'm just guessin here , a rising tsunami lifts all boats too !

 

Yen Cross's picture

  I think your level of understanding should be commended.  [ worthy of praise]