By Maggie Lee
In their last action together, Atlanta City Council approved a bill to consolidate three city pension fund boards. Litigation may follow.
City Council’s 10-4 vote came just after an attorney for one of those boards said he’d been authorized to start litigation over the issue.
What’s at issue are the three separate boards that oversee retirement investments for the city’s general staff, fire fighters and police. Council approved putting the funds under one consolidated board of trustees.
But what’s been controversial for some is the mayor’s power over the 15-member board. Most of the appointments would come from the mayor, or be top members of the mayor’s staff. There are spaces for folks who are participants in the funds —but proportionality fewer than in the boards now.
The bill also lays out some basic financial knowledge requirements for trustees.
It has an explanation for itself right in the preamble: consolidating the boards, and establishing minimum qualifications for trustees would, it says, result in more effective leveraging of investment assets, enhanced investment performance and decreased administrative costs. It calls that “best practice.”
But those three separate boards haven’t been convinced that would be best thing to do. Doug Strachan chairs the General Employees Pension Fund Board of Trustees.
“You want people that have a lot to gain or lose to be the people that are watching over the money,” he told Council on Wednesday.
He said he didn’t think there’s any opposition to more transparency and improving practices. He said he himself is not opposed to reporting to Council personally, or doing something like shadowing pension boards that Council finds to be good examples.
All those things could be done, but he pleaded for responsibility to be left in the hands of people who have “the most interest,” he told Council on Wednesday.
But he had more than pleas. The general employees fund has outside counsel.
“If the current ordinance (No.) 1589 is passed in its current form or any form and either affects the governance of pension board or otherwise strips the rights of beneficiaries, I’ve been authorized to institute litigation to declare it invalid,” Dan Fahner of the law firm Morgan Lewis told Council during public comment.
After Fahner spoke, Atlanta City Attorney Jeremy Berry advised Council members not to respond to public comment on the topic, given the threat of litigation.
Another attorney from the firm has already raised written questions with the city’s law department, specifically about whether the city needs the Georgia legislature’s approval to make the changes.
Council, however, did pass a resolution urging the next Council that takes office in January to make more changes.
It asks the next Council to consider changing the board appointments so as to include an appropriate mix of professionals in finance, investing and human resources; elected officials and plan participants. The ordinance also asks the next Council to require audits, to require the board broadcast its meetings, to commission a review of the new structure after a year, and other measures.