Dallas city, county retirees receive equal pension benefits; IRS is investigating Dallas Police & Fire
The Dallas City Council amended the definition of “spouse” at its Feb. 18 meeting for the purpose of bringing the Employee Retirement Fund into compliance with IRS regulations that went into effect on Jan. 1.
Three council members — Vonciel Jones Hill, Sheffie Kadane and Rick Callahan — voted against the change.
The IRS ruled pension plans that allow pre-tax contributions had to offer equal benefits by the beginning of the year, but could begin the process of changing bylaws, statutes or other legal documents at the first board meeting of the new year.
Dallas council members Lee Kleinman and Carolyn Davis sit on the ERF pension board. The change of wording was a compromise worked out after a five-hour meeting the previous week.
Previous wording read “Spouse means the husband or wife of a member.” New wording reads, “Spouse means the person to whom the member, inactive member or retiree is married, as evidenced by the last marriage certificate or declaration of common-law marriage on file with the retirement fund and verified by the fund to be valid in the jurisdiction in which the marriage was celebrated.”
Since gays and lesbians have husbands and wives just as straight people have husbands and wives, the wording didn’t actually need to be changed. But clarifying the wording to include same-sex couples satisfied the board.
But the debate brought up some of the hypocrisy infusing the issue.
Marriages that were valid in place of celebration were always accepted. In Tennessee, for example, first cousins can marry; in Texas they may not. However, the ERF never questioned the validity of those marriages.
Straight employees never actually had to marry to have benefits apply to their partners, because the fund recognizes common-law marriage with a “declaration.”
As the city council discussed making the change, Councilwoman Jennifer Gates expressed surprise that common-law marriage was accepted for purposes of pension benefits.
Councilman Sheffie Kadane didn’t understand how the IRS ruling could apply when state law clearly precludes recognition of same-sex marriage. City
Attorney Warren Ernst tried to explain that a pension is federally chartered and comes under federal regulations, countering Kadane’s argument that city could be sued for recognizing same-sex marriages with the fact that the pension could lose its tax-preferred status if they don’t.
In his letter to the council, Warren explained the U.S. v Windsor decision, but also said the De Leon v Perry decision applied as well. In second case, two
Texas couples sued the state, resulting in a February 2014 ruling by U.S. District Judge Orlando Garcia striking down Texas’ marriage equality ban.
Although the Fifth Circuit Court of Appeals has heard oral arguments in the DeLeon case, Garcia’s ruling stands until if and when the appeals court overturns it.
Resource Center Communications and Advocacy Manager Rafael McDonnell sent a 41-page letter to the IRS this week detailing a similar battle going on with another city pension that covers the police and fire departments. That board has refused to come into compliance with the IRS rulings.
McDonnell said he sent minutes from two meetings going back to October, a letter signed by Resource Center CEO Cece Cox, who is an attorney, the February meeting agenda and news coverage of last week’s contentious meeting.
Late on Wednesday, Feb. 18, McDonnell received a response from the IRS noting that the agency is actively looking into the situation. A clarification of what the IRS meant by offering equal benefits to all couples is expected.
Over at the county
Dallas County employees are covered by the Texas County and District Retirement System.
Spokesman Russ Rhea said the TCDRS is in compliance with the IRS ruling. Information on the website has not been updated, however.
“I checked with the TCDRS folks and they have confirmed that members can designate their legal spouse as their beneficiary regardless of gender,” Rhea said.
While the Dallas ERF and Fort Worth’s employee pension plan are in full compliance, few others around the state are.
Members of the Texas Municipal Retirement System, which covers employees in more than 800 cities in Texas, “may name any person, spouse or non-spouse, of either gender as a beneficiary for a retirement annuity that pays a survivor benefit should the TMRS member die,” according to TMRS spokesman Bill Wallace.
Others may be “functionally compliant,” meaning they would accept an application for a same-sex spouse, but are not actively changing their policies.
The IRS ruling was clear in stating that pensions must clear up the wording in their regulations and policies, and didn’t give funds the luxury of deciding whether they had any married gay or lesbian employees.
This article appeared in the Dallas Voice print edition February 20, 2015.
The paragraph on TMRS has been updated on Feb. 25 with latest information.