City Says Firefighter Fund Sorely Needs Audit

     HOUSTON (CN) – A city- and taxpayer-funded retirement plan for Houston firefighters is spiraling out of control, the city claims in a lawsuit, demanding records necessary for an audit.



     Houston says the fund is controlled by a board of trustees that has refused to produce the documents.
     As the fund’s sponsor and employer, the city says it is required to make contributions for Houston firefighters.
     “As with most public pension plans, plan beneficiaries, in this case, Houston firefighters, contribute a portion of their salary toward future retirement benefits,” according to the complaint in Harris County District Court. “Houston taxpayers make the remaining direct contributions to the fund in an amount exceeding the contributions of Houston firefighters. The board invests monies that exceed current demands on the fund.”
     The city says the board’s lobbying efforts have resulted in special laws that apply only to the fund, and grant it “preferential treatment and self-governance.”
     Controlling the fund’s administration and the rate of taxpayer contributions, the board does not need approval from the taxpayers, the city says.
     This carte blanche from the state Legislature allowed the board to unilaterally increase the city’s long-term contribution obligations to the fund by over 60 percent in 2000, according to the complaint.
     “Houston has developed significant concerns about the fund’s ability to meet its future retirement obligations to Houston firefighters,” the city says.
     Meanwhile, in the 12 years since the board increased Houston’s contribution rate, the the fund has seen investment returns that are nearly 30 percent less than the board projected, the city says.
     But the city says it may be able to untangle the knot through a new Texas law that requires it to use an independent accountant to audit the fund every five years.
     In preparation for the audit the city says it has repeatedly asked the board to provide needed documents, information and electronic data.
     “Houston is not able to obtain these underlying documents from any other source,” the lawsuit says.
     The board has refused to provide the materials “but has not identified a single principled reason or legal basis for its refusal,” the city says.
     Houston seeks a writ of mandamus to make the board produce the requested materials.

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