The Dallas City Council can impose term limits on board members without approval from the board that oversees the city employee retirement fund, according to the Texas Supreme Court.
The high court on Friday overturned an earlier state appellate court ruling that sided with the Dallas Employees Retirement Fund. The fund has argued in its legal challenge that the city council cannot make unilateral changes related to pensions without approval from the pension board. voters.
The state Supreme Court concluded that the city did not need board approval. The high court sent the case back to the Court of Appeals to consider whether the city needs voter consent before imposing term limits on pension commissioners.
Lawyers for the pension had argued that the fund was set up like a trust. However, the state Supreme Court ruled that even if the law governing the trust applied to the fund, the law “does not permit the city to vest core legislative authority in a third party, such as a board of directors. “It certainly does not require the city to give core law-making authority to a third party, such as the board of directors.”
“To rule otherwise would unfairly prevent the city from amending its own rules, a power constitutionally vested only in the city,” the court's summary of the decision said. As of early Friday afternoon, a copy of the full opinion had not yet been posted online.
The Dallas City Attorney's Office declined to comment Friday, citing pending litigation. Representatives for the Employee Retirement Fund did not respond Friday to requests for comment on the ruling, the latest chapter in a years-long controversy over the pension board's oversight.
The Dallas Employees' Retirement Fund was created in the 1940s, and its board of directors is responsible for administering retirement, disability and death benefits for approximately 7,500 active-duty military personnel and nearly 7,800 additional retirees.
The foundation sued the city in 2018, a year after the City Council approved an ordinance that placed term limits on three of the foundation's seven directors.
The board consists of three members appointed by the City Council, three city officials elected by active retirement fund members, and the city auditor. The term limits rule at issue applied to three directors elected by the fund's members. The City Council voted to change the city ordinance to add a cap on three consecutive terms.
The change meant that two of the fund's three representatives would no longer be eligible to continue as directors after their current terms expire.
A state district judge ruled in the city's favor in 2019. The fund appealed, and the Texas 5th District Court of Appeals reversed the lower court's ruling in 2021. The city petitioned the Texas Supreme Court in March 2022 to reconsider the case. The Texas Supreme Court agreed to the city's request to reconsider the case in February 2023.
Attorney General Ken Paxton weighed in on the controversy in an amicus brief filed with the Supreme Court last year. He said he doesn't think the pension board should have the power to approve or veto City Council decisions because its members are not elected. He argued that the portion of the provision requiring board approval violates the state constitution.
