M&C Review


COUNCIL ACTION:  Approved on 11/6/2012 - Resolution No. 4142-11-2012

DATE: 11/6/2012 REFERENCE NO.: G-17724 LOG NAME: 12PENSION LITIGATION
CODE: G TYPE: NON-CONSENT PUBLIC HEARING: NO
SUBJECT:  

Adopt Resolution Ratifying the City's Lawsuit Against the Employees' Retirement Fund and the Retention of Kelly, Hart, and Hallman L.L.P., as Outside Counsel to Represent the City in the Lawsuit, and Authorizing Payment of Counsel Fees in the Amount of $100,000.00 (ALL COUNCIL DISTRICTS)


RECOMMENDATION:

It is recommended that the City Council adopt the attached Resolution ratifying the lawsuit filed by the City against the Employees' Retirement Fund of the City of Fort Worth, the retention of  Kelly, Hart, and Hallman L.L.P., as outside legal counsel to represent the City in the lawsuit, and authorizing payment of counsel fees in the amount of $100,000.00.

 
DISCUSSION:

In 1945 the City of Fort Worth established the Employee's Retirement Fund of the City of Fort Worth (Fund) which is a tax-qualified government pension plan (Plan). The Fund is administered by the Board of Trustees of the Fund (Board). Since 2007, the Plan has been governed by 6243i of the Texas Revised Civil Statutes. The statute permits both the Board and the City Council to make rules governing the Plan. However, only the City can make changes to benefits. The Plan is also subject to Article 16, Section 66 of the Texas Constitution.

On July 10, 2012, the City Council adopted Resolution Nos. 4102-07-2012 and 4103-07-2012, notifying the Board that the City Council intended to consider and vote on amendments to the Retirement Ordinance for police officers and general employees to reduce non-accrued benefits provided by the retirement system.

On August 29, 2012, the Board approved a request by the Fort Worth Police Officers Association to call an election for police officers only to increase their contributions to the Retirement Fund. On October 2, 2012, the Board notified the City Council that the police officers had voted to approve an amendment increasing their contributions to the Fund.  

On October 23, 2012, the City Council adopted Ordinance No. 20471-10-2012, which amended the Retirement Ordinance to reduce benefits for future police officers and to reduce benefits for future service accrual for existing general employees and police officers. The Motion to adopt the amendment included a motion to reject the amendment to increase police officer contribution to the Fund.    

Shortly after the City Council adopted Ordinance No. 20471-10-2012, a lawsuit for declaratory judgment was filed by the City of Fort Worth against the Fund to declare that the benefit reductions adopted by City Council were in compliance with Article 16, Section 66 of the Texas Constitution. The lawsuit also requested the Court to find that the election for police officers to increase their contributions to the Retirement Fund violated Section 6243i because it did not allow general employees and firefighters to vote as required by the statute. Due to the important nature of the issues involved in this lawsuit, the City had to file suit immediately in this matter.

        

The City Manager and the City Attorney agree that, because of the extraordinary complexity of this area of law it is necessary to retain outside legal counsel with significant knowledge in pension law to ensure that the City's interests are protected.  Kelly, Hart, and Hallman L.L.P., has experience in a wide range of benefit matters, including pension, and has agreed to represent the City.  Chapter VI, Section 3 of the City Charter requires the City Council to approve the retention of any outside legal counsel for assistance to the City Attorney. Accordingly, it is recommended that the City Council adopt the attached Resolution ratifying the lawsuit and ratifying the retention of Kelly, Hart and Hallman, L.L.P.,  to represent the City in the lawsuit, and authorizing payment of counsel fees in the amount of $100,000.00.

 
FISCAL INFORMATION/CERTIFICATION:

The Financial Management Services Director certifies that funds are available in the current operating budget, as appropriated, of the Risk Management Fund.

 
TO Fund/Account/Centers
 
FROM Fund/Account/Centers
FE71  534060  0137120   $100,000.00

Submitted for City Manager's Office by:
Susan Alanis (8180)
Originating Department Head:
Sarah Fullenwider (7623)
Additional Information Contact:
Gerald Pruitt (7616)

 
 
ATTACHMENTS
  KHH resolution 11-6-2012.doc