"Stealin' all your bread, they're so callous ... I know well ... just look and see." — "Dallas," as performed by Jimmy Buffett

Upon disembarking from a recent flight to Dallas I overheard a resident of southern Oklahoma jokingly remark that he no longer has to travel to Dallas, that Dallas is coming to him. The growth in that city’s northern suburbs is explosive.

As I navigated west to east across north Dallas (no easy task by car), I was surrounded by a wealth of new infrastructure and construction. Dallas, and Texas in general, weathered the Great Recession admirably. And despite recent setbacks in oil prices, Dallas continues to expand at a phenomenal rate.

Against this backdrop, it seems completely implausible that this city could find itself in financial straits. But such is the case, and the reason is incompetence and corruption in the management of the Dallas Police and Fire Pension system.

Consider this report from Institutional Investor Magazine: "Not only had DPFP engaged in a series of unorthodox, highly risky investments, but the board, with help from the state legislature, had granted overly generous retirement benefits, which the pension, with its finances in shambles, cannot pay. Its unfunded liabilities currently stand at about $3.3 billion..."

How severe is the municipal financial crisis? And how important is proper supervision and management of a large pension fund? Dallas, the 10th largest city in the country, is teetering on the brink of bankruptcy. The city serves as the financial backstop to this huge pension plan, so the problem is not just the issue of providing promised benefits to the families of 10,000 police and firefighters and others, but the city's overall economic health as well.

Overpromising payouts and under delivering on investment returns is a common problem in troubled pension plans. No exception here. Members in the pension's DROP program “received an interest rate of between 8 and 10 percent” in 2008 and 2009 while investments were losing money.

DPFP funds were invested in farmland, agriculture and timber in places like South Africa and Australia, luxury property developments in California, and land development deals in Colorado and Iowa. An astounding 25 percent of pension fund resources were directed toward real estate-related projects. Pension fund board members were treated to all-expense paid trips to exotic locales such as Hawaii and Dubai. One board member noted that the day he joined the board he was offered a free trip to Australia for him and his family.

The more money there is at stake, the more important it is that fiduciary supervision and oversight be exercised. The financial health of any municipality or any personal fortune, regardless of size, can be destroyed by corruption, greed and risky investment choices. Even a city like Dallas.

Margaret R. McDowell, ChFC, AIF, author of the syndicated economic column "Arbor Outlook," is the founder of Arbor Wealth Management, LLC, (850-608-6121 — www.arborwealth.net), a “fee-only” registered investment advisory firm located near Sandestin.