The Houston Firefighters Relief and Retirement Fund (HFRRF) has filed a lawsuit against the City of Houston, challenging the constitutionality of provisions in a recently passed bill intended to help fix the city’s struggling pension plans.
The bill (SB2190) requires HFRRF to use certain financial assumptions, however, the pension’s board said in the suit that it has sole constitutional discretion over determining actuarial assumptions for the fund. The HFRRF also claims the bill will take more than $950 million in future retirement benefits away from active and retired Houston firefighters
“We filed suit because our board is already being asked to knowingly violate its duty to the Texas Constitution through provisions contained in SB2190,” said pension fund board Chairman David Keller in a statement. “We will not collude in an act we believe to be illegal based on sound legal analysis.”
In March, Keller testified before the Texas Senate State Affairs Committee and the House Pensions Committee, saying that based on consultation with constitutional lawyers, certain parts of the bill were unconstitutional.
“We warned everyone from the beginning that SB2190 is unconstitutional, it did not have to come to this,” said Keller. “HFRRF recommended fair benefit adjustments to the legislature, but leaving out the unconstitutional parts, which would have still been a very appreciable cost savings to the city.”
According to the HFRRF, a 1975 constitutional amendment approved by statewide vote gave the pension board exclusive authority to “administer the system or program of benefits.” The lawsuit states that the “Texas Constitution vests in the fund the sole authority and discretion to select legal counsel and an actuary, and adopt sound actuarial assumptions to be used by the system or program.”
The lawsuit also says that the bill sets an assumed rate of return and grants authority in part to the city of Houston and its actuary to determine other actuarial assumptions, including future assumed rates of return.
“These determinations are central to pension fund management,” said Keller, “and belong solely to the HFRRF Board of Trustees.”