The Dallas City Council today was briefed on a potential fix for the city鈥檚 , which could go broke in as soon as a decade without any changes.
The proposed plan targets some of the fund鈥檚 most generous benefits. The pension鈥檚 cost-of-living allowance would change and the city would increase its contribution to the fund by a billion dollars over the next 30 years.
There鈥檇 also be changes to the Deferred Retirement Option Plan, known as DROP. That鈥檚 a separate savings account for first responders eligible for retirement, but who want to keep working.
For years, DROP guaranteed an interest rate of at least 8 percent.
鈥淔olks out there, police and fire, took advantage of something they were offered," Chief Financial Officer, Elizabeth Reich said. "Absolutely. And it was a great deal. I don鈥檛 fault anyone for that.鈥�
But some of the pension fund鈥檚 real estate investments were overvalued, and then lost money. Allegations of mismanagement surfaced. Moody鈥檚 estimates Dallas has the of any big city.
A part of the solution, Reich says, is eventually cutting the guaranteed interest rate on DROP accounts to zero.
鈥淎bout 3,800 employees do not have a DROP account. This does not affect you. For the 3,000 people that do have a DROP account, the effect will vary, based on how long they were in DROP, etc.鈥�
More than $500 million have been withdrawn from deferred retirement accounts since August 鈥� which has been described as 鈥渁 run on the bank.鈥�
this week 鈥� as a private citizen 鈥� to try to freeze those withdrawals. A judge denied that request, pending a pension board meeting Thursday on the matter.
Rawlings will also give a State of the City address Thursday.
