The City of Fresno is facing a lawsuit for not increasing its contributions to the overfunded retirement system for the city’s firefighters when it approved the budget earlier this year for the 2024-2025 fiscal year.
The City of Fresno Fire & Police Retirement System and City of Fresno Employees Retirement System filed a lawsuit against the city last month, asking the court to order the city to implement the retirement contribution rate changes.
The backstory: Similar to problems facing the State of California and other major cities, Fresno was facing a looming issue earlier this year: a $47 million deficit by the end of fiscal year 2025, which could have ballooned to hundreds of millions of dollars over the next five years if the city did not take any action.
- In order to help offset the deficit, Fresno Mayor Jerry Dyer initially proposed a budget that would reduce staffing at three fire stations from four firefighters to three at a time.
Driving the news: The city council and city administration found a compromise, decided to reallocate $6 million that was being added to the Fire Department’s retirement system in order to keep staffing cuts at bay.
- The Fire Department’s retirement system was already overfunded by 116% – a $268 million cushion. The city still contributed $36 million to the retirement plan in the budget and did not touch the cushion.
- “We are fully funding the retirement system,” City Manager Georgeanne White said at the June 20 council meeting, when the budget was approved. “I want to make that crystal clear – fully funding the retirement system. What we have proposed is to not continue to overfund it.”
- Earlier in the meeting, Dean Sanders, the President of the Executive Board of the firefighters union, spoke in opposition to the move, arguing the system would not be fully funded by the city, which could be detrimental.
The big picture: The systems claim in the lawsuit that the city is breaking California law by not paying the actuarially determined contribution rates that were determined by the Fresno and Police Retirement Board and the Employees Retirement Board.
- The lawsuit also cites two appellate court decisions that were published this year, along with another ruling by the California Supreme Court regarding retirement funds.
- In Los Angeles County Employees Retirement Association v. County of Los Angeles, the court ruled that state law gives public retirement boards the authority to set actuarially-determined contribution rates and that the county was required to comply. In Alameda Health System, et al. v. Alameda County Employees’ Retirement Association, et al., the court ordered Alameda Health System to pay employer contributions based on the rate set by the board. The California Supreme Court made a similar ruling in Alameda County Deputy Sheriff’s v. Alameda County Employees’ Retirement Association, et al.
- “Given that the City continues to refuse to make the required contributions to F&PRS and ERS in direct contravention of the California Constitution, California case law, and the City’s own Charter, Petitioners are forced to bring this action against the City,” the lawsuit reads.
What they’re saying: Fresno City Attorney Andrew Janz issued the following statement to The Sun in response to the lawsuit: “My office will not comment on the specifics of the Writ of Mandate, but I will note that the City has historically fully funded the pension system, including in this year’s budget, despite questions regarding executive pay at the Pension Board.”
- Sanders told The Sun that the city needs to fulfill its obligation to the pension system.
Read the lawsuit:
