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Old 11-21-2016, 01:49 PM
 
321 posts, read 505,146 times
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Can someone do a quick Cliffs Notes for this debacle? I've read numerous articles but it still seems confusing. Thanks.
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Old 11-21-2016, 02:42 PM
 
526 posts, read 849,622 times
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Quote:
Originally Posted by photostoresheila View Post
Can someone do a quick Cliffs Notes for this debacle? I've read numerous articles but it still seems confusing. Thanks.
Back in 1993 Dallas was trying to attract and retain quality police and fire employees. The budget was constrained on salaries so they made big promises on retirement benefits. They made it all look like it would have paid for itself on paper by estimating very optimistic returns. Essentially kicked the can down the road.

Then, instead of taking modest market returns which would have come up a little short (8.75% return vs the estimated 9%), they decided to pay big money investment experts to manage the money hoping they could beat the market. They took long shots on things like luxury real estate properties and the famous Museum Tower. Most of those lost and now the fund is billions behind where it needs to be.

Fast forward to today. Either the city bankrupts itself trying to bail them out, we get ridiculous taxes hikes or the hard-working police and fire employees, that put their lives on the line everyday to protect the city, can never retire. Most of whom were told, “we can’t pay you the salary you deserve but we promise to take care of you when you retire.”


Think of it like this. You want to buy your dream house. You budget how much you think need and start saving. After a couple years you realize you have underestimated how much you need for your dream house. Instead of settling for a house you could afford you decided to take what you saved and double it in Vegas. But instead of "you" doing this it's someone else doing it with your money.

Last edited by pharpe; 11-21-2016 at 02:53 PM..
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Old 11-21-2016, 03:27 PM
 
3,634 posts, read 7,386,448 times
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Someone tell me again how fiscally prudent is to live in Dallas?
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Old 11-21-2016, 07:21 PM
 
Location: plano
6,794 posts, read 8,438,599 times
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I see dallas council members on the board of this entitty. The city must contribute to the fund? How is the city not involved? Why didn't they have a say in this matter? A company selects a board for their pension funds why didn't the city participate the same way? The city pays for the pension obligations how did they not have a say in the generous formulation behind this mess? The city benefits from quality employees how can they not be involved in this?

Last edited by Johnhw2; 11-21-2016 at 08:33 PM..
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Old 11-21-2016, 08:39 PM
 
8,985 posts, read 9,637,031 times
Reputation: 7609
Quote:
Originally Posted by pharpe View Post
Back in 1993 Dallas was trying to attract and retain quality police and fire employees. The budget was constrained on salaries so they made big promises on retirement benefits. They made it all look like it would have paid for itself on paper by estimating very optimistic returns. Essentially kicked the can down the road.

Then, instead of taking modest market returns which would have come up a little short (8.75% return vs the estimated 9%), they decided to pay big money investment experts to manage the money hoping they could beat the market. They took long shots on things like luxury real estate properties and the famous Museum Tower. Most of those lost and now the fund is billions behind where it needs to be.

Fast forward to today. Either the city bankrupts itself trying to bail them out, we get ridiculous taxes hikes or the hard-working police and fire employees, that put their lives on the line everyday to protect the city, can never retire. Most of whom were told, “we can’t pay you the salary you deserve but we promise to take care of you when you retire.”


Think of it like this. You want to buy your dream house. You budget how much you think need and start saving. After a couple years you realize you have underestimated how much you need for your dream house. Instead of settling for a house you could afford you decided to take what you saved and double it in Vegas. But instead of "you" doing this it's someone else doing it with your money.
You should do a few hours of reading and then edit the above because you are blaming the city erroneously. The state legislature came up with the rosy investment guarantees/projections - not Dallas.
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Old 11-21-2016, 08:43 PM
 
993 posts, read 1,993,696 times
Reputation: 1111
Quote:
Originally Posted by pharpe View Post
Back in 1993 Dallas was trying to attract and retain quality police and fire employees. The budget was constrained on salaries so they made big promises on retirement benefits. They made it all look like it would have paid for itself on paper by estimating very optimistic returns. Essentially kicked the can down the road.

Then, instead of taking modest market returns which would have come up a little short (8.75% return vs the estimated 9%), they decided to pay big money investment experts to manage the money hoping they could beat the market. They took long shots on things like luxury real estate properties and the famous Museum Tower. Most of those lost and now the fund is billions behind where it needs to be.

Fast forward to today. Either the city bankrupts itself trying to bail them out, we get ridiculous taxes hikes or the hard-working police and fire employees, that put their lives on the line everyday to protect the city, can never retire. Most of whom were told, “we can’t pay you the salary you deserve but we promise to take care of you when you retire.”


Think of it like this. You want to buy your dream house. You budget how much you think need and start saving. After a couple years you realize you have underestimated how much you need for your dream house. Instead of settling for a house you could afford you decided to take what you saved and double it in Vegas. But instead of "you" doing this it's someone else doing it with your money.
nope.
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Old 11-21-2016, 08:44 PM
 
993 posts, read 1,993,696 times
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Quote:
Originally Posted by MurphyPl1 View Post
Someone tell me again how fiscally prudent is to live in Dallas?
really??
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Old 11-22-2016, 12:21 AM
 
Location: Dallas, TX
1,171 posts, read 823,923 times
Reputation: 254
looks like it is Dallas city issue.
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Old 11-22-2016, 08:21 AM
 
Location: plano
6,794 posts, read 8,438,599 times
Reputation: 6095
Quote:
Originally Posted by EDS_ View Post
You should do a few hours of reading and then edit the above because you are blaming the city erroneously. The state legislature came up with the rosy investment guarantees/projections - not Dallas.
Thanks for the info, I did not realize this. The state has a role in fixing this in my view now given this fact. I wonder why Dallas is in such bad shape not others as well if the state did the same to other pension assumptions?

Thanks again for taking the time to understand this issue and educate us.
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Old 11-22-2016, 09:00 AM
 
1,070 posts, read 831,470 times
Reputation: 1909
Quote:
Originally Posted by Johnhw2 View Post
Thanks for the info, I did not realize this. The state has a role in fixing this in my view now given this fact. I wonder why Dallas is in such bad shape not others as well if the state did the same to other pension assumptions?

Thanks again for taking the time to understand this issue and educate us.
The pension board, charged with the fiduciary duty to oversee the plan assets and act in the best interest of plan members, allowed all this nonsense to happen. According to some accounts, board members even enjoyed the disastrous real estate strategy because it allowed them to take lavish, all expenses paid trips to far off destinations, justified I imagine as diligence trips. The city does not control that board. A majority of board members, and certainly enough to control ALL investment strategy decisions, are elected by the rank and file fire and police. They put their trust in people who, at best, were in over their heads at the task of overseeing a multi-billion dollar retirement fund. At worst, they trusted people who sold them out for a few annual boondoggles.

I empathize with retirees who were duped by people they apparently trusted, but if Dallas bails them out of their bad decisions, where are we? Bailing out retirees will crowd out spending for decades, delay fixes to decaying infrastructure, and likely result in tax increases or receiving so little in city services in return for our tax bill that most people with the means to do so will leave the city proper.
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