The Houston Firefighters' Relief and Retirement Fund has suffered a setback in its legal battle with the city of Houston over legislation it claims hurts the $4.2 billion fund.
The Texas Court of Appeals affirmed Thursday a district court ruling that sided with the city in its use of its own actuarial assumptions to determine how much it should contribute to the fund.
The Houston firefighters claimed that a bill that the Texas Legislature passed in 2017 allowing the city to use actuarial assumptions different from the fund actuary's assumptions was unconstitutional.
"We are disappointed," Brett Besselman, the chairman of the Houston Firefighters' Relief and Retirement Fund board of trustees, said in a news release. "This ruling, if upheld, would set the stage for perpetual shortchanging of firefighters' retirement benefits."
While the fund's board of trustees assumed a 7.25% rate of return on the fund's assets for its actuarial valuation report in May 2017, the city council passed a budget that used the Senate bill's assumed 7% rate of return, a discrepancy that caused the fund to sue the city, Mayor Sylvester Turner and other city officials.
The fund faulted the city for allocating less than half of the amount that should have been contributed to fund its pension obligations. In addition to punitively cutting firefighter benefits and altering the fund's funding mechanism, the bill breached the Texas Constitution by taking away the HFRRF board's right to select the actuarial assumptions to be used by the fund, it claimed in the lawsuit.
"We will continue our legal challenges because Senate Bill 2190 violates the constitutional requirement that pension boards set actuarial assumptions to avoid local political tampering," Mr. Besselman said.
The fund has sought to compel the city to allocate the funding it stipulated in its actuarial valuation report as well as a temporary and permanent injunction prohibiting the city and its officials from acting in reliance on the bill.