Dallas can put limits on pension board members’ terms, state supreme court says

The Dallas City Council can put term limits on board members overseeing the city’s municipal workers’ retirement fund without the board’s approval, according to the Texas Supreme Court.

The high court on Friday overturned a prior state appeals court ruling that sided with the Dallas Employees’ Retirement Fund, which has argued in legal challenges that the City Council can’t make unilateral changes related to the pension without the approval of the pension board and voters.

The state Supreme Court concluded the city didn’t need the board’s approval. The high court sent the case back to the appeals court to consider whether the city needs a sign off from voters before limiting the terms of pension board members.

Attorneys representing the pension had argued that the fund was set up like a trust. But the state Supreme Court said that even if laws that govern trusts applied to the fund, they don’t “authorize much less require the city to bestow the core power of legislating on any third party, such as the board.”

“To hold otherwise would improperly prevent the city from amending its own rule, authority that is constitutionally given only to the city,” said a summary of the ruling released by the court. A copy of the full opinion had not yet been published online as of early Friday afternoon.

The Dallas City Attorney’s Office declined comment Friday, citing the pending litigation. Representatives of the employees’ retirement fund didn’t immediately respond to requests for comment Friday on the ruling, which marks the latest chapter in a yearslong dispute over pension board oversight.

The Dallas Employees’ Retirement Fund was created in the 1940s, and its board of trustees is responsible for administering retirement, disability and death benefits for almost 7,500 active civilian employees and another close to 7,800 retirees.

The fund sued the city in 2018, a year after the City Council approved an ordinance that put term limits on three of the fund’s seven board members.

The board is made up of three people appointed by the City Council, three city employees selected by active retirement fund members and the city auditor. The disputed term limit rule applied to the three board members picked by fund members. The City Council voted to change the city code to add a cap of them being allowed to serve three consecutive three-year terms.

The change meant two of three fund representatives would have been ineligible to continue on the board after their current terms ended.

A state district judge ruled in favor of the city in 2019. The fund appealed and the Court of Appeals for the Fifth District of Texas reversed the lower court’s judgment in 2021. The city petitioned the Texas Supreme Court to review the case in March 2022. The Texas Supreme Court agreed to the city’s request to review the case in February 2023.

Attorney General Ken Paxton weighed in on the dispute last year with an amicus brief filed with the Supreme Court. He said he believed the pension board shouldn’t have powers to grant or veto any City Council decision because the board members aren’t elected. He called the part of the code requiring board approval a violation of the state constitution.