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FBI Whitepaper
Cost of Public Corruption
Dallas Police & Fire Pension - System
trustees have a fiduciary duty to provide pension
and related benefits to its members. System trustees also have a duty to
ensure affordability to our first responders, the City of Dallas and its taxpayers.
Contrary to media reports, legislation passed during 2017 while favorable
did not fix the pension fund and all remains at risk.
The System’s cost of corruption
can be readily determined by reviewing System financial statements and
include monies paid from the pension system fund for an army of consultants
to include law firms, accounting firms, actuarial consulting firms,
investment management firms, turnaround management firms, the cost to lobby,
the cost to mediate, the cost to recruit and train and the list goes on.
On the other hand, the City of
Dallas, embedded within an economically viable area commonly referred to as
the DFW Metroplex, is financially challenged by changing work force
demographics, an aging infrastructure in need of repair, and economic and
social costs of corruption directly attributed to the Dallas Police & Fire
Pension fund debacle to include but not limited to the following:
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Credit Rating
– City of Dallas officials anticipate seeking voter approval this fall
for a $1 billion plus bond issuance with a cost-to-carry anticipated in
the eight to ten point range, or about twice the cost had recent credit
downgrades citing concerns regarding the pension fund not occurred. Also
impacted by credit rating downgrades are current holders of City of
Dallas debt, and possible insolvency issues perceived by institutional
investors.
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Public Safety
– City of Dallas first responder resignations and retirements have been
substantial citing concerns regarding the pension fund, and are
anticipated to continue for the foreseeable future. There has been a cost of corruption impact on first responder morale,
retention and recruiting that could if unabated impact public
perception adversely influencing those wanting to move to Dallas and those willing to remain.
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Economic
Development – City of Dallas economic development
incentives needed to retain and attract new business are destined to
increase. A cascading effect for sure, the cost of corruption magnifies
crime and public safety concerns, and directly impacts the City’s credit
rating making the cost to borrow both unaffordable and less likely to
resolve changing work force and aging infrastructure issues.
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Deferred
Retirement Option Plan – DROP monies held on account by the
pension fund must be retained (pursuant to new legislation) for the
System to remain financially viable. Members wanting access to their
DROP monies sooner rather than later are most certain to raise legal
challenges re the conversion of member accounts (by legislative mandate)
to member annuities. An adverse court ruling would most certainly result
in plan insolvency and possible plan termination.
Columbus A. Alexander, III, CPA
Certified Fraud Examiner
September 1, 2017
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