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Courts

Judge dismisses Houston Firefighters’ lawsuit challenging pension reform

The Houston Firefighters' Relief and Retirement Fund's lawsuit challenging the constitutionality of a pension reform law was dismissed by a Harris County District Court judge.

The pension reform package, proposed by the city of Houston and passed by the Texas Legislature on May 24, includes benefit reductions for participants in the $3.9 billion Houston Police Officers' Pension System, $3.8 billion firefighters' fund and $2.3 billion Houston Municipal Employees Pension System. It further requires Houston to make the full annual required contributions to the three plans, adopts a 30-year closed amortization schedule, calls for the issuance of pension obligation bonds, and reduces the pension funds' assumed rates of return to 7% from the current rates — which ranged between 8% and 8.5% when the bill passed the Legislature.

On May 30, one day before the reform package was signed into law by Texas Gov. Greg Abbott, the firefighters' fund sued the city, arguing that the pension fund has "sole constitutional discretion" over determining the fund's actuarial assumptions, including its assumed rate of return.

On June 30, the judge dismissed the lawsuit in its entirety and rejected the pension fund's request for a temporary injunction on the law, which took effect July 1.

"Obviously, we are disappointed with these rulings," said David L. Keller, chairman of the firefighters' pension fund board, in a statement on the fund's website. "The board will discuss our options with our legal team and then make a decision as to our future efforts."

Houston Mayor Sylvester Turner said in a separate statement that he was pleased with the ruling. "The city will move forward with sustainable pensions for our first responders and city employees," he said.

The three pension plans face $8.2 billion in unfunded liabilities combined.