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Dallas mayor files lawsuit to stop pension withdrawals

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


By Claudia Lauer 
Associated Press

DALLAS — Dallas Mayor Mike Rawlings filed a lawsuit Monday seeking to stop the Dallas Police and Fire Pension system from allowing retirees to pull their deferred retirement funds from the ailing system.

Rawlings' attorney wrote in the lawsuit, which the mayor did not file in his official capacity, that he believes the pension board is "willingly failing" to perform its duty. It asks a judge to issue an injunction to stop the withdrawals, which the mayor asked the board to do in a letter last week.

Dallas mayor Mike Rawlings, left , and Dallas police chief David Brown, right, during a news conference, Friday, July 8, 2016, in Dallas. (AP Photo/Eric Gay)
Dallas mayor Mike Rawlings, left , and Dallas police chief David Brown, right, during a news conference, Friday, July 8, 2016, in Dallas. (AP Photo/Eric Gay)

"Because (deferred retirement) Participants do not have any right to a lump-sum withdrawal of (deferred retirement) funds, this method of payment may only be used when the Pension System is solvent, liquid, and actuarially sound," the lawsuit contends. It also states that the pension system's staff is close to liquidating assets to pay for the withdrawals.

More than $500 million in deferred retirement funds have been withdrawn since August, worsening the fund's finances.

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 its deferred retirement program.

Rawlings issued a statement through a spokeswoman Monday.

"As a 40 year resident and taxpayer of the City of Dallas, I have chosen to personally file suit in District Court not only to protect the retirement benefits of all our police and fire personnel, but also to protect the pocketbooks of all my fellow citizens and taxpayers. I am funding this suit and at no time will any taxpayer dollars be expended in this effort," he wrote.

The pension board's attorney, Joshua Mond, didn't immediately respond to a call Monday seeking comment. The board's president, Sam Friar, said in a letter to beneficiaries last week that the board doesn't believe it can restrict access to the deferred retirement funds under the state constitution.

The city and the pension board have been at odds over how to fix the financial issues with the fund. City officials have noted that dozens of the retirees withdrawing their funds are retiring with as much as a million dollars because of hefty benefit changes to the deferred retirement program voted in by members over the past two decades.

Pension officials have said the city has failed to make a financial commitment to keeping the fund solvent. They have presented options to the city for increasing its financial contribution by as much as $1.1 billion.

A state district court judge cleared the way last week for beneficiaries of the plan to resume voting on proposed benefit changes as part of a fix. In order for those to pass, 65 percent of the membership must approve them. The lawsuit, which will go to trial in March, seeks to invalidate the pension board's actions alleging that it has more members than is allowed under state law.

The city council will hold a briefing Wednesday to hear details of the city's proposed fix for the pension plan.

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