The Dallas City Council unanimously approved a resolution Wednesday laying the ground work for legal action against the failing Dallas Police and Fire Pension Fund.
News 8 has learned that four city council members will likely file a lawsuit against the pension system contending, among other things, that it is violating its fiduciary duties by agreeing to release money held in high-interest savings accounts known as DROP.
“This is not a step that the four (council) pension trustees have taken lightly,” Council member Philip Kingston said during the council meeting. “There is a severe problem at the pension. We need the help of a court, I believe, in order to sort it out. The idea is not to damage the system, but to save it.”
Earlier this month, all four council members who sit on the board – Erik Wilson, Philip Kingston, Scott Griggs and Jennifer Gates –voted against the board’s plan that would create an orderly withdrawal process from what’s known as DROP – or Deferred Retirement Option Plan — accounts. These are special high-interest savings accounts and a big reason the pension is going broke. The fund has a nearly $4 billion shortfall.
The resolution approved by the city council Wednesday encourages the council members who serve on the pension board to “take all available actions to address the system’s dire financial situation.” It authorizes paying any costs arising from “those actions.”
“We’re in uncharted waters right now,” Gates said, “and it’s really important to us for those that are putting ourselves out there as trustees for the pension that we have our support of our council and that if we find ourselves in legal issues that we are indemnified by the city.”