RETIREMENT NEWS

What is it about a web page that make people want to call and tell you things? Anyhow, I have had several people call me lately with various retirement fund tidbits, so I decided to add it to our page. As soon as they write up their stuff and get it to me, I will post it. I have also called one of the Retirement Fund board members and he has promised to send us news. In the mean time, if you have any thoughts or news on this subject, do send it to me. Don't forget to include your name, department and a phone number in case I have any questions. To send Retirement info to the site, please click here.

 

North Texas Association of Public Employees

Steel Workers Local 9479

 

TMRS - A Viable Option?

I would like to respond to the recent “Pension Fund Review Committee News” article in the union newsletter.  The Pension Review Committee’s statement that Texas Municipal Retirement System (TMRS) was only for small departments could only have been made out of total ignorance of the TMRS system.  They could not have done any research before making such a statement.  I don’t believe anyone could reasonably describe the City of San Antonio (a TMRS member) as a small city, especially since the most current census data shows that San Antonio has a total population greater than Dallas. TMRS investments totaled $10.6 billion in 2003, yes, that’s billion with a “B”, and they paid out $443 million to retirees.  I question how much research was done before the latest committee decided that TMRS was not capable of handling our city’s pension money.   

I contacted TMRS this week and asked specifically if TMRS had been contacted by the City of Dallas or the Dallas Civilian Employees Retirement Fund (ERF), and if TMRS had been contacted by either party, what information was given to them by TMRS.  TMRS Membership Development Manager David Rodriguez personally responded to my request for this information saying “We have received contact from various employees concerning a similar request such as yours (just inquiries mainly).  But we have not really explored the possibility of bringing the entire city of Dallas into TMRS.”  He went on to explain that he would be “happy to be a participant and communicate the TMRS system in detail” should I want to set up a meeting with the ERF or the Pension Review Committee.  

How seriously is the Pension Review Committee considering any other pension fund as an alternative, or is the city not about to let the civilian pension money out of their grasp without a huge fight?  WHY?  Is there some truth to the rumors that the city uses the civilian retirement funds for other purposes, perhaps as a means to patch holes in their problematic budgets?  Or as a means to repay the Federal Government for grant money that was misused and/or mismanaged?  What other reasons could there be for their reluctance to fix the under-funding problem with the civilian pension fund?  Why do they continue to waste more and more money to “study” the problem?  We all know that it will not fix itself.  The pension fund is just like credit card debt, the longer you carry that balance, the more indebted you become.  The pension fund is under-funded, and at some point in the future there won’t be enough money to pay what the city owes to retired employees or future retirees.  Can any of us afford to take the risk of not having a pension, particularly when, as City of Dallas employees, we have not been contributing to Social Security?  Many won’t even have the meager income that Social Security might provide to fall back on.   

As a former employee of a TMRS member city, and with money still in their system, I never realized how good I had it being with TMRS, until I was with the City of Dallas.  Since I have money in both the Dallas pension plan and TMRS I feel that I can talk fairly about both my impressions and experiences with TMRS as well as the ERF.  TMRS serves over 780 cities and 133,000 members, retirees, and beneficiaries.  Currently the ERF claims that there are 7,588 contributing members, with 4,608 retirees or beneficiaries for a total of 12,196 members.  The largest city in TMRS is San Antonio; they have 6,478 contributing members.  San Antonio and Dallas seem to be close enough in size and pension plan numbers that I can’t fathom why TMRS is not being seriously considered to replace the current under-funded and poorly invested ERF.  Over the last 3 years ERF has consistently lost money on their investments.  ERF took losses of 9.7% in 2002, 5.3% in 2001, and 3.4% in 2000.  That is 3 years in a row of losses for a pension fund that was already in trouble.  TMRS managed to pay their contributors 8% interest in 2003, 8.75% interest for 2002, 9.5% interest for 2001 and 10% interest for 2000.  I think those figures speak for themselves.  Losses vs. gains, which do you want from your pension fund?  Additionally, despite having almost 7 times more money to manage than ERF does, TMRS manages to keep expenses far lower.  As an example, in 2002 TMRS managed assets of $10.2 billion, with total expenses of $8.5 million.  That same year ERF had assets of $1.6 billion, and expenses of $9.8 million.  In other words, TMRS expenses were $64 per member, while ERF expenses were $806 per member, or more than 12 times higher!  And don’t forget that ERF managed to lose $113 million that year, while TMRS members earned 8.75% interest.  So, TMRS manages more money, does it for far less, and turns a healthy profit.  ERF manages much less money, does it at far greater cost, and loses over a hundred million dollars of your money in a single year.   

As for the claims that TMRS has a smaller pay out than the current Dallas pension system I will offer my own records as proof that what they are telling us is wrong.  The last full year I contributed to TMRS I made $29,299 or $2,442 monthly.  If I had continued at that same salary until age 55, I would have received a monthly retirement benefit of $4,222.  However, I left that city to come to work for Dallas.  I left my money in TMRS, and with 11.5 years of contributions in that system, at age 60 I can collect $45,864 a year or $3,822 a month from TMRS alone.  If I had worked for Dallas for that 11.5 years earning the same salary, and left my money in the pension fund at age 60 I could collect $9,266 a year or $772 a month.  Just in case anyone thinks this can’t be true, lets just say that I worked for the city of Dallas for double the 11.5 years, so 23 years at the same salary while contributing to the ERF pension fund, I would then be eligible to collect $18,532 a year or $1,544 a month.  The TMRS benefit is more than quadruple the ERF benefit.   

11.5 years TMRS        $3,822 a month in benefits

11.5 years ERF           $   772 a month in benefits

23 years ERF              $1,544 a month in benefits  

TMRS has another positive going for it in my opinion.  Each individual has their OWN account, with their own funds deposited in it, and the interest earned is deposited in each individual account yearly.  You can access your account information at any time.  You receive statements each year with updated information showing how much you have contributed to your account, the interest that has been deposited, how many months/years you have been in the system, and predictions on what your retirement benefits will be with 7 or more options on how you want your money distributed to you when you retire.  There are clear explanations of the many different options you can choose from through TMRS.  All in all it is much more clear and concise about what you have, what you can expect at retirement, and what choices you can make when you do retire.   

ERF on the other hand is one lump fund.  There is no way for any of us to know that all the funds were deposited in the pension plan.  We have to trust that the city does what they say they will.  Why should we be so trusting?  After all, this is the city that made a deal several years ago with the employees.  The city asked employees to increase our contributions into the pension fund, and the city promised to increase their contribution as well.  However, they also promised to ask the Dallas residents to vote on the civilian retirement fund issue.  I quote from page 4 of the Retirement Fund election booklet handed out in October/November of 1999 “Regardless of the outcome of the employee vote, the City will be asking Dallas residents to vote by 2002 on changing the City ordinance that governs the Fund.”  Mayor Laura Miller was on the City Council that passed this resolution.  After Laura Miller became Mayor, she then said that she should not have her hands tied by something a past City Council did!  How can we trust anything the City tells us when our own Mayor can’t keep the promise she made as a City Council person just because it doesn’t suit her to do so as the Mayor?   

The ERF has been under-funded for at least 7 years that I am aware of.  I have no idea how long the city has known about the under-funding problem, but they obviously knew about it before 1999 or the City Council would not have passed a resolution to “correct the funding problem”.  The city has refused to address the problems with the ERF.  Instead, they have committees or panels or consultants “study” the issue.  The issue is clear; the retirement fund does not have enough money in it for the long term.  Common sense would tell anyone that the longer we delay in getting the pension fund problems fixed the deeper in the hole the fund gets.  If TMRS is really not a good fit for our city pension plan for reasons not readily obvious to me, what other plans, if any, is the current committee considering?  The ERF, in its current form with the City in control of who invests the money and how it is invested, is not a viable option.  - Pam L 

 

 

Pension Problem Update

February 18, 2003

Thanks to a recommendation from the Governmental & Minority Affairs Committee, headed by Dr. Maxine Thornton-Reese. The City Council today declined to give the City Manager’s office any direction that they wanted to vote on opt-ing out of Proposition 15.

The Governmental & Minority Affairs Committee which included council members Steve Salazar,  Bill Blaydes, James Fantroy, Dr. Elba Garcia, and Ed Oakley unanimously voted to recommend that the council not act on this provision. Which means that ‘earned’ pension benefits will be protected by state law and cannot be reduced in any way.  

Council members Lill and Greyson along with others also made it very clear that they felt that the City should allow the state protections to be applied to the City’s Civilian and Uniform funds.  Mr. Rasansky was the only member who voiced an opinion that perhaps an opt-out election should be discussed.  

In attendance at this briefing besides the Steelworkers, were our Retirement board representatives Randy Stalnaker and Carla Brewer as well as several members of the Dallas Retired Employee Association including Charles Griffith. Jennifer Varley and James Cowgill. 

 

********************************************

February 9th 2004 

To All City Employees:  

We are facing a major threat to our pension. As you know, Proposition 15 passed in the last election. This new law protects municipal pensions from being reduced for existing employees or retirees.   Good news huh???   Actually, no. Or at least not good news for us.   It would have been, except that there is a one time clause in the new law that gives the local municipal governments (like Dallas) a one time opportunity to op-out of following this law if they put it to the voters.   And guess what??   The City of Dallas will be exploring that option next week!! What a surprise!  

A council briefing that was supposed to take place on March 3^rd  was been moved up to next Wednesday, Feb 18^th.   This means that the Municipal and Minority Affairs committee which is addressing this issue on Tuesday the 17th, will not be given a fair chance to make a recommendation on whether or not the city should even consider this anti-labor option.  

What is in it for the city?   Well the stand-alone election could cost the city up to a million bucks to hold, but look at the return.    IF the city can get this on a ballot and passed by the voters then they could literally save tens of millions (and more) a year in back funding that should have been put in the pension fund to make it whole. And…. IF they reduce the benefits, which they would then be legally allowed to do, they could actually balance the budget anytime they like by reducing benefits to the employees and retirees.  Cool huh? Just think, no more pesky pension funding deficits, and they could balance the budget with out raising taxes or cutting services. Win-win for the city right?    Of course cutting pension benefits would mean breaking promises to their employees and creating major hardship for the existing retirees, but…. Well, sometimes ya just have to make tough choices.  

I urge those employees that live in the city to contact their council members and press them (politely) to defeat this in Wednesday’s council session. Those employees who don’t live in the city need to call upon their friends and family that do live in the city to do the same. And all of us need to encourage our families and friends to attend the Wednesday meeting and make sure the council realizes what a despicable betrayal of the city employees this would be.   

Rumor has it that Council members Garcia, Reese, Hill, Chaney, Fantroy, Griffith and Blades are fairly sympathetic to the employees on this issue.

Dr. Elba García - Dist 1 - Ph: (214) 670-4052 - Fax: (214) 670-1815 egarcia@mail.ci.dallas.tx.us 

John Loza Dist 2 - Ph: (214) 670-4048 - Fax: (214) 670-1816  jloza@mail.ci.dallas.tx.us

Ed Oakley Dist 3 -Ph: (214) 670-0776 - Fax: (214) 670-1833  edoakle@mail.ci.dallas.tx.us

Dr. Maxine Thornton-Reese - Dist 4 - Ph: (214) 670-0781 - Fax: (214) 670-5117 mtreese@mail.ci.dallas.tx.us

Donald W. Hill - Dist 5 - Ph: (214) 670-0777 - Fax: (214) 670-3409  dwhill@mail.ci.dallas.tx.us

Steve Salazar- Dist 6 - Ph: (214) 670-4199 - Fax: (214) 670-1833  ssalaza@mail.ci.dallas.tx.us

Leo V. Chaney, Jr. - Dist 7 - Ph: (214) 670-4689 - Fax: (214) 670-1819 lchaney@mail.ci.dallas.tx.us

James L. Fantroy - Dist 8 -Ph: (214) 670-4066 Fax: (214) 670-1834 jfantro@mail.ci.dallas.tx.us

Gary Griffith Dist 9- Ph: (214) 670-4069 - Fax: (214) 670-5117 ggriff@mail.ci.dallas.tx.us

Bill Blaydes - Dist 10 - Ph: (214) 670-4068 - Fax: (214) 670-1843  bblayde@mail.ci.dallas.tx.us

Lois Finkelman - Dist 11 - Ph: (214) 670-7817 - Fax: (214) 670-0765 lfinkel@mail.ci.dallas.tx.us

Sandy Greyson - Dist 12 - Ph: (214) 670-4067 - Fax: (214) 670-5650  sgreyson@mail.ci.dallas.tx.us

Mitchell Rasansky - Dist 13 - Ph: (214) 670-3816 - Fax: (214) 670-1831  mrasans@mail.ci.dallas.tx.us

Veletta Forsythe Lill - Dist 14 -Ph: (214) 670-5415 - Fax: (214) 670-1847  vlill@mail.ci.dallas.tx.us

 

********************************************

Meeting Notes January 8th, 2003

The Chairman for the City of Dallas Civilian Employees Pension Fund , Randy Stalnacker and Pension Fund Member Carla Brewer met this evening (Thursday January 8th) with the Steelworkers, other civilian associations, and Charles Griffith of the Dallas Retiree Association. 

 

Mr. Stalnacker and Ms. Brewer gave us a run down on the current state of the Retirement Fund, information on the 'Mayors Retirement Review Panel' and the Opt-out possibilities from the new state law protecting our pension that the City of Dallas may or may not choose to pursue.

 

We also received a quick run down of the people that the mayor appointed to this panel. Bill Quinn (A&R Investments), Tim Handley, Rusty Rose (Dallas Investor) and Brenda  Jackson (Oncor Senior Vice President).

 

The date and times have been set for the first two meetings and we will be notified when locations for the meetings are chosen. While we will be able to monitor the meetings, it is unknown at this time if public (employee) comment will be solicited or allowed. 

 

The Steelworkers of course have committed to work closely with our fellow employees to assist our elected Pension Fund members in what ever way we can.  We will be in close contact with them and the Dallas Retirees Association, and continue to keep our fellow employees informed.

 

One last bit to remember per Mr. Stalnacker.... the amount of the city's contribution percentage to our retirement fund remained the same from 1944 until we joined with the city in increasing the contribution percentage in October 2000. 

 

Also, no retiree benefits have increased in the last ten years.

 

If you wish to comment on this news item you click on the Message Board link on the left hand side.

 

Many thanks to the Dallas FOP for letting the group use their meeting room.

 

********************************************

Retirement Association Special Fund Raiser

As you know, the retirees were an enormous help in putting pressure on the city to sweeten the deal on the health deduction problem. Had we not teamed up with them, it is very possible that we would have gotten the deductible increase WITHOUT the $500.00 stipend scheduled to be paid to us this January.  

Well, they have spent a lot of money this last year, both on that and on assisting to get the State Pension Guarantee law passed. So I urge all members to read, post and pass on the following letter from Mr. Griffith and consider assisting them to rebuild their coffers for the next time the public needs educated about the employee pension plan. After all, with the way the charter currently reads. They can do stuff politically that we currently are barred from doing.  – M. R. Frey

Charles Griffth Writes...

The DCREA executive committee decided to solicit donations from the entire DCREA membership to replenish its funding reserves so that it remains prepared to do whatever is necessary to protect our earned pensions and benefits.  In about two months this has raised almost $6,000.  Donations from DCREA members and future members will assure that DCREA continues to have the ability to fight for the city retirement benefits earned as active employees of the City of Dallas .  All funds collected from this effort will be deposited in a separate "education" fund to be used exclusively for this purpose and we will periodically provide updates on the fund-raising progress on our web site (www.dcrea.org).  

Your support of this effort is definitely needed.  We expect to have to continue our fight for the medical insurance benefits that were promised.  Also, the passage of the state constitutional amendment to protect our city pensions (Proposition 15) was a big success; however, the City of Dallas could still void the new law as far as it is applicable to our pensions by having a successful referendum election on May 1, 2004 to overturn it for Dallas .  If the City Council decides to hold such an election, we must be fully prepared to fight for its defeat to assure that our pensions are protected from the possibility of arbitrary or malicious actions by the City Council.  In addition, we have been seeking a referendum election to change the governing ordinance of our pension plan to assure on-going adequacy of funding.  This action could be placed on the May ballot in 2004.  If so, it will take an active effort on our part to promote this with the voters to assure that it passes and this too will be an extraordinary expense for DCREA.  

If you want to help us help you, please make your check or money order donation (not tax deductible) to the Dallas City Retired Employees Association and mail it to the following address:

DCREA

  P.O. Box 140264

Dallas , TX 75214

Please indicate in the memo portion of your check or money order that it is for the "Education Fund."  Also, please enclose on a separate piece of paper your name and address and note your affiliation with the North Texas Association of Public Employees for our records.  Thank you.  

Charles Griffith, President

Dallas City Retired Employees Association  

*******************************************

Pension Fund Report

from

Austin Texas Pension Review Board Hearing.

 

November 5^th 2003

 

As you may know, there has recently been a lot of controversy over the City’s reluctance (refusal?) to follow through on promises made to the Civilian Employees and the Texas Pension Review Board (PRB). After the confusion between the report made by Mr. Benavides to the Texas RPB in March http://www.prb.state.tx.us/tools/minutes and the October Council discussions, the Steelworkers Association decided to send observers to today’s Pension Review Board meeting in Austin .  

 

The meeting opened with the PRB Chair, Shari O. Shivers questioning whether the City of Dallas was possibly acting in bad faith, since it appears to have set aside a previous agreement it had made both with the PRB and the Dallas Civilian Employees. She also questioned a memo that was sent to her by Mayor Miller stating that there was not going to be anyone at today’s meeting representing the City of Dallas . Ms. Shivers felt that this memo was an insult to both Mr. Benavides and to the members of the Texas PRB. It appeared to her that the City of Dallas does not currently have a plan to address the pension short fall issues. She did not seem to consider the first meeting of a new working group, to restudying the issue, to be a viable a plan of action. It also appeared to her that the City of Dallas did not send a representative who COULD speak to the PRB on behalf of the City.   (Ed. Note. Ms. Shivers did not appear to be a happy camper over these recent events.)

 

The Chairman for the City of Dallas Civilian Employees Pension Fund , Randy Stalnacker then spoke. He briefly outlined the history of the problem and the agreement that had been made between the working group, the Employees Pension Fund, the City Council and the Texas PRB. He then went over the events occurring during at the October 15^th council briefing, including his request that the council authorize the election necessary to finalize the agreement. He reported that the council took no action on his recommendation, but instead instructed the city manager to form a panel to study the pension benefits. He then reminded the PRB that retirees have had no Benefit Improvements in ten years. (Ed. Note. In other words we are not under funded due to the Employees Retirement Fund increasing the pension benefits in any way.)

 

The PRB then asked Stalnacker if he knew why the city council did this? Stalnacker replied that he could not speculate on the council’s reasons.

 

City Manager, Ted Benavides then spoke. He wanted to update the PRB on what has happened since he spoke to them last March. (Ed. Note. Which is when he assured them that the agreed upon plan was going to be implemented.)  Benavides stated that since that time, the council has been briefed and there had been a consensus that the city should designate a five person panel to study funding, governance, investment programs, legal issues, benefits, how the plan compared to other plans, changes that could be made to the plan and how the plan should fit into the over all composition of the City’s benefit package. He then restated what the agreement HAD been and that arrangements had been made with the Employee Pension Fund to delay the agreed upon increases until 2005 due to the economic problems besetting the city. (Ed. Note. This assistance given to the city  apparently taking place before the October meeting where the whole agreement was torn apart.)

 

There then followed much discussion with the PRB generally not being real happy with the City, and especially not with the memo from the Mayor that no one would be at the meeting representing them. (Ed. Note. What is City Manager Ted Benavides??? Chopped liver?)  See below for meeting tidbits.

 

Benavides said that he had not seen the memo from the Mayor declaring that he did not represent the City and was unaware of it contents. The PRB promised to give him a copy.

 

Mr. Car wanted to know what about the agreement would prevent the city from tweaking the benefits at its leisure. After several variations of this question, Benavides admitted that it would not affect future adjustments to benefit levels. He went on to state that the automatic clause in the agreement seems to have spooked the council, especially as it wrestles with the 5-5-5 Police and Fire raises.

 

The PRB seemed to be pretty skeptical of the City’s hopes that the employees would again pitch in and do their share to balance the fund. Vice Chairman Mahomes questioned this, wondering why the employees would have any confidence at all in a new agreement with the City, when the previous one was being disregarded?

 

Mr. Rowe wanted to know who kept deciding not to put the agreement on the ballot? When told that the ‘City’ decided, he pressed for information on who exactly was this ‘City’ that was making these decisions? (Ed. Note. They all appeared to be interested in this information. ;D Perhaps because then they would know who they had to talk with to get a binding agreement from Dallas . Or possibly it would make it easier for the PRB to subpoena this ‘City’ person to make sure Dallas had someone at the next meeting that DID represent it.)

 

Chairperson Shivers stated that the employees had voted on increasing their share in good faith, but wondered what would happen in the future since it seemed the city would always have competing interests that needed funding.

 

The PRB wanted to know if the Mayor was aware of their concerns. Rowe stated that he recently called Mayor Miller three times and she has yet to return the calls.

 

Mahomes stated that the Mayor had wanted to come and plead Dallas ’ case directly, yet she did not show, nor send a representative that could speak for her.  He also wondered about the planned changes to benefits. Did he understand that the city was going to treat new hires differently? Benavides told him yes, since the pension is pure over head and does not fill one pot hole, the City needed to look at benefits given to the new hires.

 

Cargill then recommended a study to Benavides that examines the income requirement needed to retire. (Ed. Note. Benavides lightly touched on turning new hires over to the state fund, social security or defined contribution only.)

 

Rowe thinks that who ever the ‘City’ is they need to tell the PRB what they are going to do. This has been dragging on for NINE years. He seems to feel that the ‘City’ needs to do something… declare bankruptcy, fund it, hold the election, or whatever, but that he wants the ‘City’ to sign off on a solution. He DOES NOT want to see anymore studies as this has been going on too long already. (Ed. Note. It was pointed out that even the State Government can make decisions faster than this. Much laughter ensued from that comment.)

 

The PRB then decided to communicate their joy with the current situation in a letter to the ‘City.’ (Ed. Note. And I imagine the mayor and council will get a copy also. They seemed to be quite snaky and a tad sarcastic when mentioning this mysterious ‘City’ entity)  The PRB will also set up a time at the next meeting, three months from now when this can be hopefully settled once and for all.

 

Closing notes…. One of our retirees pointed out to the PRB that Mayor Miller had previously been on the 1999 council when the agreement had been unanimously accepted.

 

I wish to thank my fellow Steelworker Association members for supporting the decision to make this trip and also to send a special thanks to retiree Richard Greisman who accompanied me. I would also like to thank Mr. Stalnacker for sharing his knowledge with us, and to commiserate with Mr. Benavides for the difficult position he was placed in today.

 

As always I will close by encouraging all Civilian Employees to join the Steelworkers Association, so that we can work together to solve the problems affecting us.

 

Thank You,

 

Michealle Frey - President

Steelworkers Local 9479

North Texas Association of Public Employees.

 

History of what has happened to get us to this point

http://www.ci.dallas.tx.us/cso/cc092299.htm

OFFICIAL ACTION OF THE DALLAS CITY COUNCIL

September 22, 1999

99-3072

Addendum addition 13:    A resolution adopting the City of Dallas Employees' Retirement Fund Study & Recommendations dated September 10, 1999 presented by the City of Dallas Employees' Retirement Fund Joint Working Group which include (1) a phased-in increase in the City's contribution rate from 8.5% to 11.0% of payroll, (2) a phased in increased in the employees' contribution rate from 5% to 6.5% of pay, which increase must be approved by an employee vote, (3) if employees vote to not increase their contributions, a benefit decrease with respect to the rule of 78 and joint and one-half survivor options, (4) automatic pro rate adjustments to employer and employee contribution rates on October 1, 2003 and every three years thereafter if required by the Fund's actuarial valuation, (5) prohibition of membership in the Fund to anyone receiving a benefit from the City's Police and Fire Pension Fund and (6) for eligibility under the rule of 78, an employee with a break in service must have 5 years creditable service after returning to City employment - $4,000,000 in FY 2000-2001 and $8,000,000 in FY 2001-2002 - Financing: Current Funds (subject to annual appropriations)

The following individual addressed the city council regarding the City of Dallas Employees' Retirement Fund Study and Recommendations:
 

--   Elsie Risby, 2900 Dilido Rd.

Mayor Pro Tem Poss moved to approve the resolution.

Motion seconded by Councilmember Thornton Reese.

Councilmember Lipscomb asked Mayor Pro Tem Poss if she would accept a friendly amendment to her motion to pass the resolution with the exception of #5, "prohibition of membership in the Fund to anyone receiving a benefit from the City's Police and Fire Pension Fund".

Mayor Pro Tem Poss accepted the amendment as part of her motion.
Councilmember Thornton, who seconded the original motion, also accepted the amendment.

After discussion, Mayor Kirk called the vote on Mayor Pro Tem Poss' motion as modified by the friendly amendment.

Mayor Kirk declared the motion as modified by the friendly amendment, unanimously adopted.

OFFICIAL ACTION OF THE DALLAS CITY COUNCIL

September 22, 1999

99-3073

PRESENT:   [15]     Kirk, Poss, Salazar, Loza, Miller, Thornton Reese, Hill, Mallory Caraway, Chaney, Lipscomb, Walne, Finkelman, Greyson, Blumer, Forsythe Lill
ABSENT:          [0]

 

http://www.prb.state.tx.us/reports/biennial/1999-2000/projects.htm

Dallas Employees Retirement Fund

The PRB was instrumental in bringing the City of Dallas and the Dallas Employees Retirement Fund (DERF) Board together to develop a long-term funding solution for the financially troubled pension plan. After years of debate about the very existence of the problem, the City and the DERF were able to adopt a series of contribution increases and actuarial changes that should adequately fund the pension program for the employees of the City of Dallas.

In 1995, DERF conducted an experience study which revealed that many of the actuarial assumptions used by the fund did not match the fund experience. After adopting the assumption changes, the fund showed a $21 million annual shortfall between current contributions and the actuarially determined amount needed to support current benefits over the long term. The Dallas City Manager’s Office, not agreeing with the DERF report, commissioned its own study which concluded that the fund was strong financially. After negotiations between the City of Dallas and DERF were unsuccessful in reaching an agreement, DERF requested that the PRB review the actuarial assumptions and the differences in the interpretations between the City and DERF.

The PRB held public hearings on February 20, and April 10, 1997, receiving extensive testimony from both sides of the debate. In a report adopted by the PRB at its June 11, 1997 meeting, the PRB concluded that it should be emphasized that due to the complex nature of actuarial science that a major shift in one assumption has a ripple effect on all the other assumptions.

By the end of 1998, the city and the pension board were able to start working on a solution to the problem. After long denying that its municipal pension system was under-funded, the City of Dallas under the leadership of a new City Manager acknowledged that a funding problem existed. Teodoro Benavides, who assumed the City Manager position in June 1998, acknowledged that the system was inadequately financed. His approach effectively abandoned the argument made by the previous City Manager John Ware that the system was actuarially sound.

To deal with the problem, the City created a four-member working group to find a solution for the annual contribution shortfall that exceeded $26 million. The group included representatives of the DERF Board and the City Manger's Office. The working group called in experts to help them study the issues and develop a proposal that would solve the problem in a way that that was fair and equitable for both the employees and the City.

After almost a year of reviewing the Fund's financial situation, the working group came to the unanimous agreement on a proposed solution to the funding problem. The solution proposed by the working group called on the City to increase its contribution from 8.5% to 11% of payroll over a two-year period beginning October 1, 2000. The proposal also called upon the employees to increase their contributions from 5% to 6.5% of pay over the same two-year period. The combined City and employee contribution rate would then total 17.5% of pay by October 2001.

The working group also recommended the enactment of benefit reductions in the event the employees did not vote to increase their contributions. The City was prepared to seek voter approval of benefit decreases of up to 6% for future retirees who retire under the Rule of 78 before age 60. Reductions in Joint and one-half survivor benefits were also proposed.

In a show of support of the working group, the Dallas City Council unanimously voted on September 22, 1999 to increase the City's Contributions effective October 1, 2000 and again on October 1, 2001. By the following December, the employees voted in over-whelming numbers to increase employee contributions.

In 2002 the City will ask Dallas residents to vote on changing the City ordinance that governs the Fund to provide for actuarially determined contribution rates. Under this proposal, if the Fund's actual experience varies greatly from the assumptions, contribution rates would be adjusted up or down, only if required. This adjustment process would take place once every three years, only if necessary. The City has committed to paying 63% of any necessary adjustments (up or down) in the future.

Pension Fund Woes – Or when is a done deal a done deal?

On Wednesday, October 15^th, the city council received a briefing about the dismal state of the employee pension fund.  Randy Stalnacker, a city employee and board member of the Employees Retirement Fund (ERF), Mr. Rowe from the State Pension Review Board (SPRB). Also present was Luke Sweetser who was representing the Private sector view for Mayor Miller.  Basically, this meeting was requested by the ERF to try to get the City Council to set a date for a promised referendum on the pension funding.

 The problem, according to Rowe, is that Dallas is one of the two municipal pension funds in the state which has been historically under funded, El Paso is the other.  In September of 1999, the City Council had unanimously approved a funding solution that was to be presented to the voters in May of 2002.

 As we all know, no pension referendum has yet been placed before the voters. Recently, Mr. Benavides was in Austin assuring the SPRB that the city was committed to this referen-dum, wanted to correct the problem, and would put the matter before the voters as soon as possible.

 So everything is okay, right? Well no. It appears that the Mayor and certain city council members reject the agreement and do not feel bound to accept something that a previous council agreed to. Since it was only a “council amendment”, they can vote to reject it if they want to. 

Mayor Miller will not allow her “hands to be tied” by a previous council.  She thinks that the funding gap problem can be solved in several other ways. Such as;

1. The city can reduce benefits, (not an easy task, thanks to the recent pension fund referendum passed last election.)
2. The city can increase the employees’ contributions, this requires a 75% approval by the employees.
3. The city can “voluntarily” increase the contributions of both the city and the employees in a 1:1 ratio. Currently the contributions formula is 63% city – 37% employee. Again, this would require approval of the employees. And, how could we trust that this deal will not be overturned later? If not by them, then another city council?
4. The ERF Board could have members added to it to “balance” (dilute) the influence of the THREE city employees currently serving on it. (TWO employees are elected and one, the City Auditor, is appointed by the City as it’s representative.)

December 2002 News - According to Ms. Jordon,  Randy Stalnaker (from the Retirement Board) briefed the Finance and Audit Committee of the City Council on the status of the fund. The briefing was to report on the fund's actuarial status, propose a course of action that is needed because of the stock market down turn which has caused a funding issue, and to discuss calling an election for the changes to Chapter 40A.  (Ed. Note: Not sure what Chapter 40A refers to. If anyone has a copy and could email the pertinent info to me, I would appreciate it.) 

As it stands right now, the actuarial accrued liability of the fund is in millions $2,276 while the actuarial value of assets is only $2,017 for an unfunded actuarial accrued liability of $259 million. This makes a funding ratio of 88.6%.

The City and the employees combined contribution rate is currently 17.5% while the actuarially calculated rate should be 21.41% in order to support the current benefit package for employees. This means that the contribution rate should be increased by 3.91%. This increase could be funded by the City, or the employees or by some combination.

The reaction of the Council members present at the committee meeting was that raising the contribution rate is not the only solution. One member suggested that we do nothing and let the market take care of it when the stock market and economy improves. Others suggested that we reduce the benefits paid to retirees, such as adjusting the rule of 78. The Council members did not reach consensus and asked for another discussion with Randy in January . (Ed. Note: I will email Mr. Stalnaker and ask if we could get a copy of this briefing, and a heads up on the January one.)