I’ve gotten a bit fixated in recent days on the Dallas Police and Fire Pension System and who deserves blame for creating the $1 billion liability that the mayor thinks has the potential to bankrupt the city of Dallas. There’s a lot of blame to go around. First and foremost, there is Richard Tettamant, longtime head of the pension, ousted in 2014. But he was aided and abetted by a clueless and absentee board of trustees. So I heaped some blame on the Dallas mayors who appointed some of those trustees. Then, at the urging of a commenter on this blog, I tracked down the names of a bunch of trustees who served during the span of those mayors.
Today I want to sharpen the focus. I want to call out just seven trustees. These are the people who did something 24 years ago that we are about to pay dearly for. Today the pension board has 11 trustees. In 1992, though, there were just seven. These seven approved the Deferred Retirement Option Plan, or DROP. It was a way to retain cops and firefighters of retirement age by allowing them to put money in a plan with a guaranteed (and insane) rate of return between 8 and 10 percent. Here’s a great blog post on the Governing site from 2015 that explains why DROP was such a bad idea.
We are screwed today for two reasons. The pension made irresponsible, risky investments in real estate. And it created DROP. Here are the seven trustees, then, who sat on the board in 1992 and approved that disastrous plan:
Council member Charlotte Mayes
Council member Mattie Nash
Council member Charles Tandy
Lieutenant Gerald Brown (fire)
Sergeant Larry Eddington (police)
Lieutenant Charles Luedeker (fire)
Sergeant John M. Mays (police)
It would be interesting to know how much money those two cops and two firefighters made from DROP. Part of the reason the pension is in peril is because the pensioners have made a run on their DROP accounts. During one six-week period, pensioners withdrew $220 million from DROP. Were Lieutenant Brown, Lieutenant Luedeker, Sergeant Eddington, and Sergeant Mays among those who bailed?
This is going to get worse before it gets better.