Dallas Police & Fire Pension Board Ends DROP Payments
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DALLAS (CBSDFW.COM) - At a regularly scheduled meeting of the Dallas Police and Fire Pension System Board today the board voted to cease the pension Deferred Retirement Option Program (DROP).
The program had previously allowed police and firefighters to retire, but continue working while their pension benefits accrued interest.
The pension board had previously said no to ending the drop program. The previous decision meant that in just the past few months some $500 million from the fund was moved to police and firefighters, who 'dropped' the money into an account, but keep working.
DROP has been called a virus infecting the viability of the pension.
After the decision one DPD officer said, "I blame the Mayor and you all (pension board) for the run on the bank. You're holding people's funds hostage."
A study commissioned by the pension board projected that the fund will be insolvent in less than 15 years if no changes are made to the benefits received by members or to the amount of money the city contributes.
The fund was undermined in recent years by overvalued investments and risky real estate deals, as well as the generous benefits for the DROP program.
The City has paid its full obligation into the pension fund, but it's liabilities are much more than its assets and City Council member Lee Kleinman said that can lead to just one outcome. "The size of the liability is so huge that it could, potentially cause a bankruptcy."
Bankruptcy not only for the fund, but for the City of Dallas if it's called on to make good on the fund's losses.
Kleinman explained that it comes down to the law enacted when the pension was started. "The way the statute is written it says that the City and the system are jointly responsible to pay the benefit."
The Dallas Police and Fire Pension System is entirely under the control of police and fire unions, who say the decision by the pension board is irrelevant since it doesn't have the authority to stop withdrawals or make any changes.
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