Judge says Dallas police and fire pension vote can happen

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DALLAS (AP) — A Texas judge Friday denied a request to stop members of the ailing Dallas Police and Fire Pension system from voting on benefit reductions.

State District Court Judge Ken Molberg issued his ruling denying a request from the plaintiffs— five police officers and firefighters— for a temporary injunction to stop the election, which had been scheduled for two weeks at the end of November.

The pension board's executive director, Kelly Gottschalk, testified that the ailing fund was losing a combined $3.3 million in savings and contributions from proposed plan amendments every month the vote was delayed. Members have pulled more than $500 million in deferred retirement account funds out of the plan since August, worsening the plan's financial standing and drawing national attention.

Molberg said the plaintiffs had not met the burden of proof for an injunction, which includes showing immediate, irreparable harm caused by the vote taking place. For the amendments to pass, 65 percent of the more than 5,000 beneficiaries must approve the changes.

The lawsuit, which is set for trial in March, alleges that the pension board illegally increased its members from seven to 12.

In September, the plan was projected to reach insolvency in less than 15 years and was less than 45 percent funded to make future payments. Those problems have contributed to Moody's Investors Service twice downgrading the city's credit rating in the last two years, and city and state officials have urged immediate changes.

State Comptroller Glenn Hegar told Dallas-area business leaders this week that the police and fire pension issues were a "black eye" to the state. He and other state officials have been adamant that a local solution will have to be found.

"We anticipate that the local community, city and pension board will solve their own challenges, without the need of intervention from the state, but (we) will act if required," said State Rep. Dan Flynn, who chairs the Texas House Committee on Pensions. Flynn noted that city leaders in Houston, which also faces worsening pension issues, have come to the table with a proposal— something he hopes Dallas can do soon.

But infighting continues between city officials and pension leaders.

Mayor Mike Rawlings wrote a letter to the pension board this week asking it to stop deferred retirement account withdrawals.

"Already, as a result of your actions, the Pension System's ability to pay its members' future benefits has been irreparably reduced from a period of 15 years to 10 years," he wrote.

Pension board President Sam Friar responded in a letter to members, saying the mayor had not addressed the board members' belief that access to the deferred retirement funds is constitutionally protected.

Ailing pension systems around the country are watching to see how Dallas moves forward to stave off insolvency.

But Alicia Munnell, the director of the Center for Retirement Research at Boston College said the Dallas pension plan is an anomaly, not an example. She said the plan invested more than 68 percent of its assets in real estate and alternatives such as infrastructure and natural resources, compared with the average of less than 22 percent. She also noted that the generous deferred retirement program has exacerbated the situation.

"I don't think we're going to find the exact same things happening elsewhere," Munnell said.

Phone messages left for Gottschalk and the plaintiffs' attorney were not immediately returned Friday.

Copyright © The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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