DMN and WFAA Botch Police and Fire Pension Story

This morning I touched on the WFAA story by Brett Shipp about how much money the Dallas Police and Fire Pension System spends on staff travel. Shipp’s story is titled “Globetrotting Pension Fund Execs Raise Eyebrows.” It drove me nervous because it found that a $3.6 billion operation with investments all over the world spent a whopping $185,000 on travel last year. Yes, technically that means the execs are globetrotters. But come on. Is that travel expense really out of line? Shipp’s story provided no context. Just outrage.

So I was looking forward to reading the version of the story (paywall) published on the front page of the the Dallas Morning News. It runs to 1,500 words, and it took two people to write it (Steve Thompson and Gary Jacobson). And, thankfully, the newspaper story does offer some context. The reporters found that the Dallas Employees’ Retirement Fund, which handles money for civil workers, spent $136,000 on travel in 2011. That year, the DERF had $2.75 billion in assets under management. That means its travel expenses amounted to .0049 percent of its assets. The money spent on travel by the Police and Fire Fund, by comparison, amounts to .0051 percent of its assets. In other words, it’s practically the same ratio. The context provided by the DMN suggests that the Police and Fire Fund spends about what it should on travel — especially when you consider what sorts of investments they make (heavier on the real estate, lighter on the stocks and bonds).

There’s a story here to be told. It’s about how the Police and Fire Fund invests the retirement money of 9,000 cops and firefighters. How much risk has the fund exposed itself to? Is the fund generating returns high enough to justify that risk? The newspaper story does touch on the management fees that the Police and Fire Fund pays. Two sentences. That’s it. The rest of the story, though, appears to be a waste of ink and paper. The TV report was a joke.

When a watchdog barks at every passing car, you learn to ignore it.


  • Anna Merlan

    I seem to remember writing that story. The one about all the risky investments and whether they’re warranted, responsible, or an appropriate use of taxpayer resources.

    • Tim Rogers

      I should have linked to that story, Anna. Apologies.

    • Robert

      Anna proves once again that we still have a two newspaper town.

  • Anna Merlan

    No offense taken. Thanks, Tim.

  • pbooty

    the real crime is that government workers are allowed to unionize

    when you work for the taxpayers you are a public servant

    when the politicians are the “protectors” of the tax payers money

    the story never ends up well….for the taxpayers

    but I agree with TR on this one

    “outrage” ??

  • sooieeehog

    Sorry, I hate it when people use a big denominator to justify things. So what if you have lunch at Chili’s, or a $10,000 stripper and Cristal-filled blowout? The latter is only .0002% of the assets under management. Still doesn’t make it right.

    • Tim Rogers

      Okay, fair enough point. But mine was that the two funds appear to spend about similar amounts on travel. So why doesn’t the DMN and WFAA do a story on DERF’s outrageous spending?

  • Wylie H.

    So… a couple of things:

    1) Just because the aggregate amount of expenses is within a relevant range doesn’t mean the expenses themselves were appropriate. While Tettamant was flying back and forth to Napa Valley, Hawaii, Abu Dhabi, etc. who was minding the store on the real estate investments they had in “un fun” places like Nebraska? To what extent did things like Tettamant squandering $13,000 on premium airfare to Abu Dhabi for an investment conference inhibit the Fund’s ability to spend money on boring stuff like visiting big investments in boring locals…. or getting training on stuff like how to go it alone as a high-rise luxury condominium tower developer when every other money source has passed on the deal?

    2) To your point, the expenses should be viewed in light of the real estate portfolio’s performance relative to the market. In other words, if all this travel resulted in outsized performance, then it makes sense. So….. how’d we do last year? According to page 75 of the Fund’s annual report, the Fund delivered a mind-bogglingly bad return of negative 6.44% in 2011 versus the NCREIF benchmark of 14.3%. The fund’s real estate portfolio is a whopping $1,383,000,000 according to the same report.

    To put this in dollar terms, if the fund had simply purchased the NCREIF index (which they could easily do by contacting an investment bank and making a simple trade), they would have been better off to the tune of $287 MILLION!!! — and that’s just in one year :-0

    Of course, flying all over the place and staying in $630/night suites in Napa Valley is no doubt more fun than simply placing a single, competitively bid order to buy the NCREIF index. Much more fun to play king-maker… after all, it’s only the pension fund beneficiaries and taxpayers who end up getting harmed at the end of the day.

  • Robert

    An even bigger questions is whether Dallas’ Real Estate Industrial Complex is “pressuring” City of Dallas officials, some of whom are on the board, to make these risky local investments. Maybe, just maybe, real estate has too much pull in this town.

  • Avid Reader

    Cough, cough, Museum Tower. Cough, cough, double down on Museum Tower.

  • Robert

    cough, cough, Unneeded Trinity River Amenities, cough, sniffle, Overbuilt Arts District, cough, cough, Trinity Tollway, cough, cough, City-Owned Hotel, cough, cough, Arboretum Schemes, cough, cough, About-Face on Flood Certification, hack, hack, Gasland in West Dallas, wheeze, wheeze, Fake Suspension Bridges, gasp, death. All this in just the last 10 years. Dallas is back!

  • Tim Rogers

    Wylie, you just provided better reporting than what I’ve seen in the DMN and on WFAA. To your Point No. 1, it would have been interesting if Shipp had told us the value of the Napa asset(s), then found a similarly valued asset in (just guessing) Nebraska and called the manager of said Nebraska joint and asked when was the last time he’d had any quality face time with Tettamant.

    In any case, thank you for your solid contribution.

  • sooieeehog

    Agreed, the totals are similar. Maybe it’s because of the eye-catching total of the one trip to the Middle East?

    And I totally agree, there is a much larger story there.

  • tommy


    this is why no unions for gov servants and 401k for their retirement

    taxpayers have enough burdens