Politics & Government

Laura Miller Profits From the Pension Mess

Her husband is being paid by the city of Dallas to sue the Pension Board.

Kirk, Leppert, Miller: oh NOW they want to get involved with the pension
Kirk, Leppert, Miller: oh NOW they want to get involved with the pension

Last night, Tanya Eiserer broke a story on WFAA Channel 8 about Laura Miller and the seats on the Police and Fire Pension Board that she left unfilled when she was mayor. We learned back in November that the City Council members who were appointed to the pension board simply didn’t show up to their jobs for about two decades, while the pension was making bad investments. Now we know why the seats at the pension board were empty: no one had even been appointed to fill them. So it’s interesting that former mayors Ron Kirk, Laura Miller, and Tom Leppert would now step up as the public faces of a group, Taxpayers for a Fair Pension, whose goal is to limit taxpayer exposure to any pension fix. As mayors, they were asleep at the switch, but now they want to get involved. And it’s really interesting that one of the lawyers who is suing the pension on behalf of four council members and the mayor is none other than Steve Wolens, Laura Miller’s husband. Here’s what Miller has to say for herself:

First, the numbers. Kelly Gottschalk, executive director of the pension, told Eiserer that during Miller’s tenure as mayor, from 2002 to 2007, there were 187 board meetings. With four possible appointees, that’s 748 opportunities for Miller to have someone present, keeping an eye on things. Of those 748 opportunities, someone was there just 52 times. Gottschalk told me that one of Miller’s seats was vacant in 2002, and two were vacant from 2003 to 2007.

For four years, Miller left two board seats open. That’s astounding — especially for someone who is now taking such a public stance on what should be done to fix the mess and WHOSE HUSBAND IS BEING PAID TO SUE THE PENSION.

Last night I emailed Miller to ask her about this. Here is our full exchange. My query:

I was working on some of the same material that WFAA aired/published tonight. So I’d like to ask you the following two questions:

1. What would Laura Miller, the columnist, have written about this? The mayor (you) were apparently asleep at the switch from 2002 to 2007. While things were going to hell, the mayor (you) wasn’t even appointing council members to the Pension board to exercise oversight. Seats were empty. No oversight. And now that same mayor (you) wants to be the face of fiscal responsibility and reform. What’s the columnist’s take?

2. What would Laura Miller, the mayor, say? After you became mayor, you said you learned not to see the world in black and white. Where’s the gray here?

Thanks.

Her response:

When I was mayor, the police and fire pension board was not an issue — the fund reported out 32 percent returns for 2003 — but the civilian employees’ pension fund was significantly underfunded, and we were under pressure from Austin to fix the problem. Unlike the police and fire fund, the city had control over the civilian fund, and we fixed the problem after appointing a private study group that recommended reducing actuarial assumptions, adjusting contributions, and issuing $533 million in pension bonds that the voters approved. Obviously, if we had known back then that the police and fire pension fund administrator was making poor investment decisions and hiding the results from everyone, we would have done something about it. Just like we did with the civilian fund.

And mine to hers:

You chose not to answer my questions. And I think I understand why you made that choice.

I think Laura Miller the columnist would have hammered you for the contrast between your actions now and your actions (or lack thereof) as mayor. I didn’t ask about the city pension. I asked about the Police and Fire Pension and the board seats that went unfilled during your tenure.

May I call you tomorrow to get clarity on this? I frankly take a dim view of your involvement with the P&F Pension today when contrasted with your (apparent) lack of involvement from 2002 to 2007 — ESPECIALLY considering your husband’s recent billable hours.

But I’m young and ignorant, much as you were when you wrote as an Observer columnist. Help me see gray. Please let me know when you’re available to talk.

I haven’t yet heard back from her. I’m sure we’ll talk, though. Till that happens, I’ve got three things about our email exchange that I’d like to clear up.

First, a 32 percent return is exactly the sort of thing that should have raised eyebrows. The average return for defined benefit plans in 2003 was about 20 percent. A smart appointee sitting in one of those empty seats at the pension board might have asked how the fund was generating such high returns.

Second, Miller said that stuff about black and white and gray in 1999, before she became mayor. I misremembered the timing. In fact, her husband was worrying about her vision as early as 1998.

And, third, speaking of Miller’s husband, Councilman Scott Griggs confirmed this morning that Steve Wolens and his associates at McKool Smith are being paid to sue the pension by the city of Dallas.

Comments

  • Chris

    burnnnnnnnnnnnnnnnn… very much looking forward to the full blown article about this, if there is one.

  • EricCeleste

    Here is some free PR advice for Laura, whom I really like and who looks bad here.

    There is nothing wrong with her response, so long as it a) is presented as an explanation, not as an excuse, and b) it is followed by an honest mea culpa.

    You have to lead your city pension discussion with this: “There is no excuse. But let me tell you why I was lax.”

    Then, you have to say something like this:

    “That said, being a leader is not just about going through your to do list and fixing the problems before you. It’s also about seeing dangers in the distance, about girding your city for problems to come. I failed to do that here. For that, columnist Laura Miller would have rightly slammed me.”

    Now, PIVOT:

    “And that’s exactly why I’m now trying to do the right thing, the thing I should have done as mayor: tackle this head on, hold people on both sides accountable, and most of all fight for the citizens of Dallas. This is not of their doing, but they will suffer if we don’t solve it now. I see it as my duty to help resolve this in a way that protects citizens’ pocketbooks, precisely because of the mistakes I made. I believe it’s not too late to fix it.”

    Or whatever. I know you’d have to run that by the team’s lawyer, given the likelihood of more lawsuits, but luckily Steve is right there.

    And on that: Just say, “I know it looks odd that he is the team’s lawyer, but Steve will have to speak for himself. I’ll have him call you.” Let him deal with Tim.

    • If you had half a brain, you’d give up on this education stuff and writing columns for D Magazine, and you’d go make some real money in PR and crisis management. I’m trying right now to think of the name of your consultancy.

      Super Awesome Good Advice
      The Celestes
      Masturmind Media
      E Custom

      I don’t know. I’ll keep working on this.

      • EricCeleste

        What are money?

      • C Newman

        SAGA

    • S.D.Roberts

      So now she wants to put the toothpaste back in the tube? Good luck with that.

  • obamaniac

    you’re not young.

  • Lois Lane

    Thank you for shedding light on this group. They are NO FRIENDS of Dallas police and firefighters. They have only exacerbated the pension crisis and want for our first responders who have given so much to give up their pensions by clawbacking back money already earned and confiscating their retirement accounts. They have deep pockets and continue to spread misinformation. Shame on them, shame on those that support this group and shame on the city of Dallas.

  • Mavdog

    While it is accurate to criticize Miller for not filling the City of Dallas’ seats on the Pension Board, that’s about all that should be thrown at her.

    Steve Wolens is a capable attorney and the fact he is married to Laura Miller makes no difference in the matter. If one can show that the engagement of Wolens as counsel to the City is a mistake due to lack of experience or knowledge of the subject, fine, but that is not the case.

    Second, the comment by Gottschalk, “Her hands really aren’t clean in this. If she would have paid more attention during the time where she had a role, we might be in a different position today.” is baseless. It insults the intelligence of the reader. One, as Mayor Miller (or any other Mayor) had no ability to affect any decisions by the Board as the Board is independent of the City. Two, even with the City appointees being at the Board meetings and voting their number is a minority of the Board and their votes could not have changed any decisions. The Board, and the police and fire reps on the board specifically, is who solely should be blamed: they clearly made decisions that were not in the best interest of their constituents, the beneficiaries, and appear to have violated their fiduciary responsibility with their investment decisions and by approving the disastrous DROP initiative.

    • C Newman

      Nah. If your comments were reality, Mayor Rawlings and the other City appointees to the board at the moment wouldn’t be able to be doing what they are doing. The police/fire reps on the board definitely deserve the lion’s share of the blame, but not remotely solely. Sure the minority appointees might have gotten rolled on these votes if they had bothered to show up much. But if they had bothered to show up they might have seen some of the issues and brought almost as much attention to the situation as there is now. That spotlight and outside oversight could easily have brought the full board around to not make such absurd decisions.

      Got the mailer last Friday and laughed out loud that those jokers think they have any credibility on the issue at all, let alone enough to think their names should be attached to a group trying to shield citizens from the brunt of this fiasco.

      Agree with you on the Wolens/attorney issue or non-issue.

      • Mavdog

        What exactly is “Mayor Rawlings and the other City appointees to the board…doing”? They are going outside of the Board to push for a solution. Working inside the Board is fruitless.

        You might have forgotten about the Griggs story and the Board when he attempted to “[bring] up attention”. The Board hired an attorney to try and dig up some dirt on Griggs, hired a PR person to act as a sock puppet and defame Griggs in media, and then censured him for speaking to the public about the Museum Tower investment outside of the Board meeting.

        • C Newman

          What I have forgotten about is all of the news stories about the Mayor/City Council/City Appointees during those Mayor’s terms bringing these issues into the public spotlight, because there were none.

          • Mavdog

            “these issues”? the ones we are dealing with today?
            Yeah, they should have used their crystal ball and seen the future….shame on them! Let’s organize a rally and burn them in effigy!

          • C Newman

            With the level of knowledge you display on most issues, I don’t think you actually believe your own comment. Do you think “these issues”, yes, “the ones we are dealing with today” happened overnight? Doesn’t take a crystal ball reader in place over the many years of the decisions that led to this point should not have been made or at the very least questioned and pushed back on even a little bit. Wouldn’t even take a brilliant person to have known that an 8%-10% Guaranteed return was absurd even if the plan was able to do that in a snapshot moment. Or that shifting large percentages over the norm of similar plans into speculative real estate investments might end up racking up huge gains (that could possibly even have covered the 8%-10% Guaranteed returns they put themselves on the hook for), but was more than likely not a risk that should have even been considered. Or that after ’08 the values of those assets were somehow untouched by the recession and the plan financial outlook should be adjusted accordingly.

          • Mavdog

            I believe the issues were a consequence of incredible mismanagement at the Fund. I believe the Board is at fault for allowing the mismanagement. I believe by State law the Board is independent of the Dallas City Council. I do not believe the Mayor(s) or the Council are to blame for the Boards errors.
            The reference to the ’08 values is not an easy answer, you are now going into a discussion of the “Mark to Market” accounting standard. That is a completely separate issue and doesn’t really have an influence on what we are dealing with/discussing today. Do you believe that the ’08 values of the real estate investments are the same values in ’17?

          • Inish Scull

            I guess the 95 million short fall by benevides wasn’t the city’s fault or the millions they lost in fine revenue because no one knew where it went and contract money paid out by the city not even knowing if the work was done. Now the pension problems that really wasn’t their problem probably because they were busy losing money everywhere else. Oh and by the way benevides still makes $14,000 a month in pension payment for his bang up job. The rest of the retired city head of course make more but as you say it isn’t their fault. I wouldn’t doubt that your part of the city’s media matters disinformation outlet.

    • Morty

      1/2-agree. “…, and the police and fire reps on the board specifically, is who should be solely blamed: I think “solely blamed” is a stretch. “Disproportionately blamed” might even be fair, but anyone who had any role with this board can take at least one bite of the blame pie.

      The fact is that Miller did fail in one of her duties with respect to appointing representation to the board. I don’t know how that can be seriously disputed. Would it have made a difference? I don’t know, but it might have. The police and fire reps who were routinely present should be considered most instrumental in mismanaging the fund and then covering it up…even from their own membership. And Richard Tettamant should be in jail in my view.

      A full complement of participating City Council reps may have cut this off sooner. They do have a large megaphone, after all, and more of them with more information have an even larger one. Or they may have even decided to be complicit in the scam. I don’t know, but this is Dallas politics, after all. But they’re not being there certainly did nothing to contribute toward alleviating this crisis at anytime sooner than now, and maybe it could have. We’ll never know, will we?

      As it stands now, I hope current police and fire pensioners are stocking up on cat food! Some did well in DROP, but most aren’t in that party boat. Most will be devastated by full “clawback.” Still, they’re going to have to be willing sacrifice some reasonable degree of pension/DROP benefits, if they want to avoid a full “clawback” of all DROP interest and all COLA over all years past.

      I look forward to some more in-depth reporting on who specifically knew what and when with respect to sworn members of the board, the council members who did attend meetings, and the civilian financial planners/administrators/advisors. Was this more malice or more incompetence? When would a sound board have started making corrections? Why didn’t this one? And so on…

      • Mavdog

        The entire Board bears the blame, Gottschalk is deflecting. The majority of the Board being Police and Fire representatives was the point of the word “specifically”.
        Agree, we will never know what *could* have happened. We know that what did happen is a disgrace.

    • Jim S.

      The city council also approved the drop plan.
      As I remember, those interest rates were set that high by the pension system believing the city would negotiate a lower rate. But the city being the city saw an opportunity to save a few nickels and dimes by keep salaries low and AGREED to those rates.

      • Mavdog

        “The city council also approved the drop plan.”

        Don’t see where this was done. Can you show when the Dallas City Council voted and approved DROP? The only fingerprints on the document is of the Board.

        • john smith

          First lets get some misconceptions out of the way.
          Why was DROP created? The CITY OF DALLAS came to the pension board and asked them to come up with a plan to retain senior officers. You see, the city decided to violate the 1979 pay referendum, then they decided they werent going to pay a competitive salary or give any raises. So, this caused many senior officers to retire, why stay when you have topped out in salary for many years with no end in sight and the city could not hire enough people to keep up with attrition. They couldnt hire enough because of low pay and they did not want to spend the money. So, who is responsible for the creation of DROP????? The CITY OF DALLAS.
          The city also had to approve this plan as when officers went into DROP they no longer made contributions to the plan, now this was part of the contractual agreement with the city as to who contributes how much. Think about it, if the pension board could do it without city approval they could literally lower officers contributions to the plan whenever they wanted too.
          As to the pay calculations, officers and firefighters best 3 years pay is based on the best 3 years at their BASE SALARY. No overtime is included in that, no special pay is included (FTO pay, detective pay, master peace officer pay), you get the idea. When you look at the pretty website the mayor put together they list all this special pay, well that is not included in the pension benefit. The city did this on purpose, instead of giving raises, they came up with this special pay knowing it would not effect the end result.
          The pension board screwed up, Tettament screwed up or did something illegal, but that is a small snapshot over the life of the pension, however, the city of Dallas has been underpaying, taking benefits away and basically treating first responders like dirt for over 40 years.

          • Mavdog

            the concept of a DROP to allow senior officers to not be forced into resigning is NOT the issue. The issue is how the DPFP DROP was set up.
            what was the rate of return for the Fund’s portfolio in 2000 when DROP was put into place? 2.42%.
            what was the promised rate of return on the DROP money under the terms passed by the Board? 8% decreasing to 5%. That was set by the DPFP Board, not the City.
            Anybody who understands numbers can see the DROP structure was damaging to the Fund’s ability to pay the pensions it was established to do. It was unsustainable. The worse part is Board members who passed the plan participated in DROP. They voted themselves a lot of money at the rest of the beneficiaries detriment.
            As for the 1979 referendum, we will find out when the court hears the case. The City may or may not be liable.

          • john smith

            Yes it is the issue. DROP would have never been needed if the city had paid police and fire a competitive wage! The average rate of return for the first 6 years that DROP was put in place was over 15% for starters. Yes the board screwed the pooch on keeping the interest so high after 9/11, but they were basing that on years of good returns. As for the council members that were supposed to be watching the cities money, huh, never around. As you stated anybody who understands numbers could see a problem, they couldve done exactly what the mayor and council members are doing right now, but you had to go to a meeting or two. I am not defending the board, they made mistakes, but it was to try and give retirees a good pension once they left as we sure werent getting raises while we were here. That is the whole point. Dallas never paid us, in return they held the pension with DROP up as the great equalizer for low pay, now they want all that money back. Taxpayers never had to pay for raises over the years as they were very few and far between and never enough to get us close to other depts. The latest raises that will take 3 years to be given will still leave us below average with other depts, thats with other depts not giving raises.
            As for the pay referendum, the city is liable, they want the law to be changed so they are not. They paid off a fire chief a few years before the big lawsuit was filed as he saw they were not following the referendum. He got his raises and back pay. Once again the city wants to have its cake and eat it too.
            People have no earthly idea what damage this has done to Police dept. NO ONE is going to want to work here. Would you? Even with the changes the city wants,its not going to be to inviting, working until your 60, I know everyone else works way past that age, well police do not live as long, see the link, https://www.ncbi.nlm.nih.gov/pmc/articles/PMC4734369/.
            I guess you blame the asphalt and blacktop in Dallas for being bad, not the fact that the city refuses to fix it, now to the tune of 800 million dollars. Thats what happens when you ignore basic things, something the city is very good at doing. Take a long look at the group laura is with, none of them will suffer when crime starts to rise, they have enough money to move, most people dont.

          • Mavdog

            Look at the numbers. If DROP has been set up to pay the same rate of return the Fund was achieving on its assets there wouldn’t have been any negative. The Fund could easily have paid out the $ to DROP.

            Unfortunately that wasn’t the case and the Fund had to reach into their own pockets to pay the promised returns to DROP. That reduced the life of the Fund as that money couldn’t be invested to realize a return.

  • That’s odd, Carol. Your comment reads a lot like Lois Lane’s.

    • T_S_

      She took her glasses off when she wrote the second one.

      • C Newman

        Well done.

  • Larry Brautigam

    Where’s interview w Glenn White? Who bought Miller’s kool-aid on deferred raises.

    What is real motive/game plan for this group of former mayors? Just angling for insultant contracts?

  • DubiousBrother

    If you want to protect the taxpayers, defined benefit pension plans should not be allowed for public sector employees. The annual cost of the contribution to a defined contribution plan for the employees is the only exposure but the cost of a defined benefit plan especially with COLA can escalate rapidly when returns fall and benefits rise based upon the last few years of compensation increases before retirement.

    The DROP guaranteed returns make no sense but DROP benefits are not just in Dallas and are a problem elsewhere.

    You can’t fix this problem without changing the plan structure going forward.

    • Mavdog

      You are conflating two separate items.
      The issue of defined benefits is an issue of matching returns of a fund to benefits it is obligated to pay.
      In this case the City of Dallas’ position is it’s role is solely that of a defined contribution. If you read the comments by City Councilmembers, they believe the City has fulfilled their responsibility by its contributions and is not liable for any shortfall as a result of the Fund not realizing adequate returns to meet its obligations. Their position is the citizens of Dallas do not have any further obligation.
      I expect this to be decided by a court sometime on the future.

      • DubiousBrother

        No conflating – in a defined contribution plan the participants’ account accumulations are what provides their benefit at retirement. No actuaries are needed and there are never funding shortfalls as long as the annual contributions are made.
        Only when you promise benefits that aren’t funded properly are there down the road surprises.

        • Mavdog

          you started with “if you want to protect the taxpayer”. You then proceeded to outline the issues with a defined benefit plan as if the taxpayers would automatically be liable for the promised benefits.

          That conflation is yet to be answered. Dallas taxpayers could be determined to not be liable for the shortfall if the City prevails in the case in which it asserts it has paid all the money it was obligated to pay.

  • Big Dog

    How about this? The labor groups spent a lot of money and influence to go to the Legislature so they could upend the normal order of things, go their own way and manage their own money themselves. They said, “We’ll put in out 8%, you (the City) put in your 28%+ and we’ll handle it ourselves. We will do our own deal, we’ll do better for ourselves than you would and it’s on us. You just give us that contribution each year.”

    This is HARD for people to understand. Even the thoughtful participants in this discussion. It’s totally counter-intuitive. The deal imposed by the Legislature was that the workers were responsible for themselves. That;s the way the workers wanted it. If the City Council representatives had seen through the false reporting of the management hired by the employee DOMINATED Board and pushed to rein in excesses is there any question what the reaction would have been? Go mind your own business…. this is our money……, etc.

    As for DROP, it’s even worse. When employee X “retires” and enters DROP, the City STILL pays it’s 28% . An example: Worker X starts at age 25 and retires at age 50 with 25 years of service. He is entitled to a benefit of 75% of the average of his highest 3 years of earnings. Assume he “pumped up” his last 3 years average to $100,000 with overtime pay , Officer X gets a benefit of $75,000 (plus COLA, etc.) Probably very close to what he made BEFORE the overtime derived bump. In the first year of “retired” but still working:

    1.Officer X EARNS (not to be taken lightly..it’s a dangerous job and I honor those who accept the duty) his $75,000 salary.

    2. He deposits his $75,000 into a DROP account with the Pension Fund, where it will earn outsized interest rates AND COLA adjustments available nowhere else.

    3. The City STILL deposits its 28% ($21,000 in this example) into the Pension Fund.

    After 10 years of this when the employee retires for real, assuming an 8% interest rate and no pay raises:

    1. The pension fund is sitting on:

    A. $750,000 – the 10 years of payments it has been sitting on instead of paying them out to the “retired” employee: and
    B: $210,000 – the 10 years of payments the City continued to make for the employee.
    Total: $960,000

    2. The employee is owed:
    A. $750,000 – the 10 years of payments he DROPed.
    B. $450,000 – his 10 years of interest earnings
    total: $1,200,000

    The Pension Fund only needed to earn 4% per year on the DROP amounts to have enough money sitting in the bank to fully pay the employee everything promised to him with ZERO impact on the fund. That would have been child’s play. How could it screw that up?

    And the argument goes both ways: if the City representatives weren’t involved enough in the board governance, they certainly didn’t even try to impose anything on the Board.

    They did it to themselves!! And they want me to bail them out! And that’s AFTER I have been matching their contributions at a more than $4 to $1 ratio for all these years. Arghh!!

    • Arlie Tater

      Good points.

      Instead of conservatively investing Officer X’s $960,000 DROP account funds that he was going to come calling for in less than 10 years they used it to speculate in long-term speculative private equity bullcrap.

      Now, where do the multi-millionaire DROP chazzers come from? The power of compound interest makes it easy. With a guaranteed 12% return ( 8% interest and 4% COLA) it takes 6 years to double your money. So your Employee X just needed to leave his DROP sitting there. At age 66 he now has $2,000,000. And the first large group of DROP accounts got 10% interest, which doubles every 5 years. He had $1.850,000 when he really retired at age 60. And $3,500,000 at age 65. I’m not making these numbers up. It’s all actual figures.

      The angry, unyielding Officer X I see on TV demanding his DROP money “invested” his $75,000 pension benefit each year from 2001- 2010, has $750,000 of his own money on deposit and retired in 2010 at age 60 with a $1,800,000 account balance. 5 years later and now age 65, he is demanding $3,500,000. And his own monthly payments. And he does not give a shit if that too good to be true “deal” means the younger officers in the plan are at risk of getting nothing.

      He’s no different than a Bernie Madoff or Allen Sanford depositor, except the illusory promise to him was made by his own cohorts on the Board who benefit from the same deal.

  • Darrell

    Wow! How sweet it is profiting years down the road over the toxic spill she helped create! Big D royalty! She’s a true Dallas Sweetheart! Let’em eat cake????? She is PATHETIC!

  • Bill Gross

    I worked in Dallas during Mrs. Millers time as Mayor. I was in the City’s EOC after a series of severe thunderstorms had knocked power out for a large part of the North and East part of the City. Only two people called the EOC demanding their power be restored. Never mind the fact that TXU had control over that and that they couldn’t just do one home. TXU had to work to restore areas.

    The two people in all of Dallas Mayor Miller and Fire Chief Abrara.