“To be prudent with taxpayer dollars, we cannot promise more than can be paid out.”
Texas Insider Report: AUSTIN, Texas — “My goal was to ensure that the Dallas Police and Fire Pension plan is able to continue providing retirement for the retirees, current employees, and future employees, and that goal was accomplished,” said State Representative Dan Flynn earlier this week, after the Texas Supreme Court ruled in favor of the Dallas Police & Fire Pension System in a lawsuit brought by retirees.
“I applaud the Texas Supreme Court’s decision to support the plan on their path toward solvency,” Flynn said.
As Chairman of the House Pensions Committee, Flynn passed a bill during the 2017 Legislative Session to reform the Dallas Police and Fire Pension Plan, reversing its trend toward possible bankruptcy and ultimately putting the plan on a path to solvency.
Prior to the reform, the City’s Credit Rating had been downgraded three times in the previous two years, specifically because the plan’s over-promised and unsustainable payout promises.
However, within a year after Flynn guided the reform package to passage in the Texas Legislature, their credit rating reversed direction and was increased. Representative Flynn’s bill both increased contributions, and decreased benefits to pay down the plan’s unfunded liability over time.
Retirees enrolled in the system had argued that their constitutional rights were violated in 2014, when the plan had reduced the interest rate on their Deferred Retirement Option Plan (DROP) accounts.
They argued that the interest rate was a protected benefit under the Texas Constitution, but the court disagreed — essentially acknowledging the plan was put in jeopardy by overly generous benefits it could not pay for, specifically high interest rate DROP accounts.
Flynn praised the Texas Supreme Court’s decision to side with the pension plan, adding, “I understand the importance of retirement plans for public servants that dedicated their lives to protecting our communities, and the importance of that benefit as a recruitment tool for the next generation.
“However, to be prudent with taxpayer dollars, we cannot promise more than can be paid out, and we cannot let the pension plans become so unstable that they effect the bond rating for the city,” said Flynn.
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Source: Texas Politics