Opinion ID: 2343906
Heading Depth: 1
Heading Rank: 3

Heading: History of Investment Authority of Retirement System

Text: The fundamental issue in this case is whether the city council has the power to transfer from the retirement board to the Board of Investment Commissioners the authority to invest the funds of the retirement system. In answering this question, we must review this authority by tracing the legislative history of the Employees' Retirement System of the City of Providence. The retirement system was established by the General Assembly's enactment of P.L. 1923, ch. 489 (the retirement act). This statute, entitled An Act to Provide for the Retirement of Employees of the City of Providence, set forth a comprehensive system of contributions, benefits, and regulations relating to pensions to be paid to firefighters, police officers, and civilian employees of the city. Betz v. Paolino, 605 A.2d 837, 838 (R.I. 1992). [2] Most importantly, the retirement act created the retirement board and granted to it the power to invest all moneys not immediately required for the payment of allowances or benefits. P.L. 1923, ch. 489, §§ 3 and 4. In 1940 the General Assembly enacted a new legislative charter for the city (P.L. 1940, ch. 832 [3] ). Under the 1940 charter, the then-serving members of the retirement board were continued in office until the expiration of their terms. The 1940 charter further directed that the retirement board shall have and exercise all powers and duties now vested in said board under the retirement act. P.L. 1940, ch. 832, § 132. Under the Home Rule Charter adopted by Providence voters forty years later, in 1980, the retirement board was designated a board of the city in § 908 of the charter. In May 1981, the General Assembly ratified, confirmed, validated and enacted the Home Rule Charter, in particular in respect to § 908 (Retirement board) and § 1404 (Inconsistent acts and ordinances). P.L. 1981, ch. 37, § 1. The Charter, briefly and succinctly delineates the duties of the retirement board: 908. Retirement board. (a) Election and term.    (b) [Powers and duties.] The powers and duties of the retirement board shall be, without limitation, the following: (1) To establish rules and regulations for and be responsible for the administration and operation of the city employee retirement systems under its jurisdiction; (2) To report annually in detail to the city council on or before the first Monday in January, showing the fiscal transactions of the system for the fiscal period of the city next preceding, the amount of the accumulated cash and securities of the system and a copy of the last balance sheet showing the financial condition of the system by means of an annual actuarial valuation of the assets and liabilities. Section 1404 of the Home Rule Charter specifically provides that the charter shall be deemed to have superseded all other acts    applicable to the City of Providence which are inconsistent with this Charter. In 1991, eight years after the effective date of the Home Rule Charter, the city council approved ordinance 1991, chapter 91-5 that codified the Providence Employees' Retirement System as §§ 17-181 through 17-197 of the Code of Ordinances. The 1991 codification essentially enacted the provisions of the 1923 retirement act into an ordinance of the city. Then, in 1993, the city council enacted the ordinance that led to this controversy. Specifically, ordinance 1993, chapter 93-12, amended § 17-184 of the Code of Ordinances to transfer authority for investment of retirement funds from the retirement board to the Board of Investment Commissioners. It is clear that the charter itself does not grant responsibility for the investment of funds to the retirement board but that such authority was provided through ordinance 1991, chapter 91-5, that enacted the provisions of the 1923 act. The trial justice, however, ruled that the subsequent amendment of § 17-184, by ordinance 1993 chapter 93-12 that transferred the authority to invest pension funds to the Board of Investment Commissioners, was illegal and that any such changes in the authority of the retirement board can be effectuated only by a special election to amend the Home Rule Charter in the city of Providence. The justice further found that the retirement board continued to have authority to invest funds pursuant to the Home Rule Charter. The defendants appealed pursuant to G.L. 1956 (1985 Reenactment) § 9-24-1 and raised six issues on appeal: (1) that this matter was nonjusticiable, (2) that the city council has the authority to amend the retirement ordinance, (3) that the charter does not address the decision-making authority over investments of retirement funds, (4) that the authority to make investment decisions is not inherent in the authority to administer a retirement system, (5) that the Board of Investment Commissioners has authority to invest retirement funds, and (6) that the retirement board retains no authority to make investment decisions under the amendment.