City wins on pensions but more fights ahead

By Martha Deller Business Press Correspondent

The city of Fort Worth has won the first round in a legal battle over the constitutionality of cuts to its employee pension fund. But the skirmish will continue in federal court and, possibly, through state court appeals. State District Judge Wade Birdwell issued a two-page ruling Aug. 9 that, in essence, upheld the city’s contention that its Oct. 23, 2012, amendments to a city ordinance governing benefits to city employees complied with the Texas Constitution. Birdwell’s ruling grew out of a May 30 hearing in his 342nd District Court on the city’s motion for a summary judgment in its lawsuit against the Employees’ Retirement Fund. The city sought a declaratory judgment that reducing benefits to future police officers and general employees does not violate the state constitution. Birdwell also ruled in favor of the city’s contention that a vote by the Fort Worth Police Officers Association to increase employee contributions to the retirement fund to avoid benefit cuts was not valid because other city employees were not included in the vote. It is unclear whether the state ruling will be appealed since the city sued the retirement fund, not individual members of the administrative board that manages the fund, said Stephen Hall, president of the Fort Worth Police Officers Association. “My attorney said the only thing this ruling says it that the city can sue itself and win,” he said. Hall said police officers are more interested in a separate federal lawsuit that he and Rick Van Houten, another POA officer, filed against the city. That suit contends, among other complaints, that the city violated the U.S. Constitution by interfering with the contracts of police officers. Senior U.S. District Court Judge Terry Means had stayed the federal suit during the state court proceedings but lifted the stay on Aug. 9. Hall said his attorneys had asked Means to reconsider the stay because the state and federal issues were separate. “We just look forward to having our case move through the federal system,” Hall said. Deputy City Attorney Gerald Pruitt, who represented the city in the state case, said officials expected Means to lift the federal stay once the state ruling was made and were not surprised that he did so the same day. “We’re very pleased that the judge ruled in our favor in the state case,” Pruitt said. “We don’t know whether there will be an appeal. If there is, we’ll deal with that. On the federal case, we anticipated that once we had a resolution in the state case, we’d have to go forward with the federal case. That’s where we are. We were not surprised by that. I think we’ll be successful in that.” In approving the cuts to the pension fund last October, city officials said they were trying to close the fast-growing $748 million gap between the fund’s income and projected payouts. They acknowledged that the changes would likely lead to legal action by the police association. Unfunded liabilities in public employee pension funds have led to financial problems for local and state governments across the United States and were a key factor in Detroit’s recent decision to file for bankruptcy. Hoping to avoid such problems, Fort Worth changed the formula for calculating benefits and the years of service used in determining retirement pay. The city also eliminated overtime pay as a factor in computing retirement benefits and instituted a plan to let employees choose a 2 percent annual cost-of-living increase rather than a variable rate tied to the amount of unfunded liability associated with the retirement fund.