The Texas Supreme Court will weigh in on whether the City of Dallas had the authority to set term limits for the board of the Employees’ Retirement Fund without the board’s approval.
The Employees’ Retirement Fund (ERF) is the City’s pension fund for more than 16,800 of its non-uniform employees and contains more than $4 billion in assets.
The Dallas City Council passed an ordinance in 2017 establishing term limits for all ERF board members. The ERF board consists of seven members, three of which are appointed directly by the City Council.
However, changes to the fund’s charter must be approved by both the City Council and the ERF board. The board refused to accept term limits and subsequently filed a lawsuit against the City asking the court to invalidate the ordinance.
In its petition to the court, the City said, “When the City Secretary attempted to enforce the Ordinance, however, the ERF Department and the ERF Board initially chose simply to ignore the new provision.”
“After the City Attorney became involved in attempts to enforce the Ordinance … the ERF Board formalized its decision to ignore portions of the Dallas City Code in a resolution and then voted to authorize the executive director of the Fund to take legal action against the City.”
The trial court that first reviewed the suit sided with the City, but the ERF board appealed the ruling. The Fifth Court of Appeals then heard the case and sided with the board, according to The Texan.
The City then appealed to the Texas Supreme Court, arguing that the 2017 provision granting the board authority over amendments violated the Texas Constitution.
The State of Texas has also gotten involved with the case, filing an amicus brief in March that also challenged whether the City Council was ever able to grant the ERF board authority over the fund’s charter capable of rivaling the City’s.
“This appeal implicates those interests because it requires this Court to determine whether a home-rule city’s governing body — functionally standing in the same position as the Legislature — has authority to effectively tie its own future hands by delegating a veto power over ordinances to an independent entity,” the filing reads.
“The answer to that question is ‘no,’” the brief continues. “This functionally delegates veto authority to a collection of seven individuals, none of whom are elected by the people of Dallas.”
“That delegation was unconstitutional. Not even the city council may ‘bind a succeeding [city council] by such provisions.’”
“But assuming the State could theoretically authorize a home-rule city’s governing body to enact an ordinance that validly binds its future self, such state legislation would have to speak with unmistakable clarity,” the state argues. “Nothing in state law speaks with that clarity.”
Meanwhile, the ERF, represented by attorneys from Locke Lord, has argued that the City established the provision and had not questioned its constitutionality in prior proceedings, so it cannot raise that as an issue in the Texas Supreme Court.
The Texas Supreme Court began hearing the case on Wednesday.
As previously reported by The Dallas Express, both the ERF and the Dallas Police and Fire Pension fund have been wrought with dysfunction.
The ERF has $1.2 billion in unfunded liabilities, while the Dallas Police and Fire Pension fund has $3 billion in unfunded liabilities.
