New Orleans Can Sue Pension Board for Mismanagement, Says High Court

New Orleans

In 2014, New Orleans argued before a circuit court that it shouldn’t have to pay down the debt of its Firefighters’ pension fund, because the shortfall was caused by bad investments.

The circuit court rejected that argument.

But now, the state Supreme Court says the city can indeed sue the pension fund’s board of trustees for mismanagement of the fund.


The high court ruled Friday that Norman Foster, [Mayor] Landrieu’s finance director who also serves as a pension board trustee, can sue his fellow board members for financial mismanagement of the fund. That decision sends the case back to New Orleans’ civil court and allows Foster to draft a new lawsuit. It also tracked closely with the findings of the 4th Circuit Court of Appeal Judge Joy Lobrano, who was the dissenting vote in that 2-1 ruling in September. She had argued that Foster had a responsibility to guard the fund’s finances, and could do so in court.

Several issues, including whether it is too late for a new lawsuit or who should Foster actually sue, will have to be sorted out, said Louis Robein, the pension board’s attorney. The board’s membership has changed since the lawsuit was originally filed, forcing the city to focus on the former board members who oversaw the fund lose a good deal of revenue, including $40.2 million in 2013.

Should Foster follow through, it’s possible his suit could focus on the former board members as those responsible for the fund’s losses, Robein said.

The city is trying to avoid paying a total of $17.5 million to the pension fund.

The court said the shortfall was caused by the city skipping annual contributions, and it ordered the city to pay up. But the city argued that it shouldn’t have to foot the bill because the gap was caused by mismanagement of investments by the board.

New Jersey May Be Working Up Proposal to Merge Municipal, State Pensions

New Jersey

The leader of a group that represents New Jersey’s municipalities is warning mayors that state officials may try to merge state and municipal pension systems.

Bill Dressel, the executive director of the New Jersey State League of Municipalities, says the state is working on such a proposal in an attempt to improve the health of the state’s pension system.

New Jersey’s municipal pension systems are in much better shape than the state-level systems.

More from NJ 101.5:

According to Bill Dressel, executive director of the New Jersey State League of Municipalities, there are behind the scenes discussions in Trenton about merging the state’s cash-strapped pension fund with the healthy municipal pension fund as a possible solution to getting it out of the red.


“We’re concerned that what they’re going to do is blend the two systems,” Dressel said. “To make their system look a little bit better and put it on solid ground is to blend the two together, and that would be a big mistake.”

Dressel told the mayors that municipalities should not be penalized for mismanagement of the state’s pension system. “You have bitten the bullet. You have paid your pension bills. They have not.”


The proposal could surface soon, according to Dressel, and he encouraged mayors to be loud on the issue when it does.

If the systems were indeed merged, it would lead to lower annual contributions for the state as a result of an improved funding status. By the same token, municipalities would find themselves contributing more money to the pension system.