PERA Retirees Appeal Dismissal of COLA Class Action Lawsuit
The plaintiffs in the civil suit Gary R. Justus et al vs. State of Colorado and Public Employees’ Retirement Association of Colorado et al (Case No.: 2010CV1589) have announced that they will appeal today the June 29th dismissal of their case by Denver District Chief Judge Robert S. Hyatt. The plaintiffs are PERA retirees Gary R. Justus, Kathleen Hopkins, Eugene Halaas and Robert P. Laird. The suit challenged the 2010 action by the Colorado Legislature (Senate Bill 10-001) that eliminated for 2010 the annual benefit increases for retirees (and those eligible to retire) which had been fixed at 3.5% per year (3.25% for Denver School Division), and reduced the increases in future years so that they could be as little as 0% and no more than 2.0%.
In his decision granting defendants their Motion for Summary Judgment, Judge Hyatt distinguished between “a retiree’s contractual right to the base PERA retirement plan benefits” and “a contractual right to a specific or particular COLA.” Hyatt wrote that “there is no contract right to a specific COLA formula frozen at retirement for life.” Hyatt’s ruling effectively permits the legislature to make changes in the COLA at anytime, even reducing it to zero.
Plaintiffs will appeal based on their original claims that settled law by the Colorado Supreme Court clearly determined that COLA is part of a retiree’s contractual right and cannot be reduced. The two major cases plaintiffs cited in this case are:
Police Pension and Relief Bd. of City and County of Denver v. Bills, 148 Colo. 383 (1961)
Police Pension and Relief Bd. of City and County of Denver v. McPhail, 139 Colo. 330 (1959)
Justus explained why this case must go forward. “SB10-001 endangers the economic well being of close to 100,000 retirees.. If this decision stands, then whenever Colorado wants to renege on a contract again, it can now just pass a law changing the terms of that contract. Yet, we can’t renege on our retirements and go back to work for our public employers to make up the difference. Anyone who believes that PERA has secured our vested pension rights is sadly mistaken. PERA is just an instrumentality of the state. If we don’t stop it here, it’s open season on public employees,” he said.
Plaintiffs are represented by Richard Rosenblatt & Associates of Greenwood Village and the Pittsburgh, PA law firm of Stember Feinstein Doyle & Payne.
For more information, visit the website www.SavePERACOLA.com where the court filings and numerous comments by retirees may be found. Save PERA COLA is a non-profit Colorado 501(c)4 corporation that supports the lawsuit. Richard H. Allen is president.
A STATE SUPREME COURT WIN: NEW HAMPSHIRE SUPREME COURT PROTECTS VESTED PENSION BENEFITS.
(Sorry, I missed this story from two weeks ago.)
“The opinion by the state’s highest court finds the judges were vested the day they were appointed and changing terms of their pension benefits was unconstitutional.”
“Friday’s Supreme Court decision validates what New Hampshire’s public employees have been saying during recent legislative action to reform public pensions, said David Lang, president of the state firefighters’ union.”
“The firefighters, as well as the members of the Retirement Security Coalition, have long argued that the contract protections attach at the time the employee gets hired,” he said.
Here’s the full story:
http://www.seacoastonline.com/articles/20120331-NEWS-203310308
A PDF of the New Hampshire Supreme Court decision can be viewed here:
http://www.courts.state.nh.us/supreme/opinions/2012/2012035cloutier.pdf
MY OPINION: COLORADO PERA’S MEREDITH CUTS AND RUNS.
The periodical Pensions and Investments has just reported that Meredith Williams, Executive Director of Colorado PERA, is resigning effective June 30 to become Executive Director of the National Council on Teacher Retirement (NCTR).
Read the full story here:
http://www.pionline.com/article/20120405/REG/120409914/colorado-peras-top-exec-to-lead-teacher-retirement-council
According to their website, the NCTR is “dedicated to . . .promoting the rights and benefits of all present and future members of the (pension) systems.” Further, the NCTR aims to “assure self-sufficiency for retirees by providing a predictable benefit that is guaranteed for life” and to “preserve and protect the guaranteed rights of plan participants to their promised benefit.”
During his tenure at Colorado PERA, Meredith Williams and the PERA Board of Trustees pursued a controversial strategy for reducing PERA’s unfunded pension liabilities . . . taking fully-vested pension benefits from retired Colorado PERA members.
According to a few members of the Colorado Senate (one a prime sponsor of the legislation that took the retiree benefits) “fully 90 percent of the PERA fix comes from benefit cuts to current and future retirees” (Senators Josh Penry and Greg Brophy).
Soon, Meredith will be sitting down with his new board of directors. I propose that he break the ice by asking the board to settle the following pressing pension reform questions:
Does Colorado’s example of taking fully-vested retiree pension benefits conform with the mission of the NCTR to “promote the rights and benefits of present and future members”?
Does Colorado’s example of taking fully-vested retiree pension benefits conform with the mission of the NCTR to seek “self-sufficiency for retirees by providing a predictable benefit that is guaranteed for life”?
Does Colorado’s example of taking fully-vested retiree pension benefits conform with the mission of the NCTR to “preserve and protect the guaranteed rights of plan participants to their promised benefit”?
. . . and a few general pension reform questions hanging in the air:
Setting aside the morality of such reforms, is the taking of fully-vested, contracted, accrued and earned pension benefits a route that should be considered by state and local governmental entities?
Why should the contractual obligations of state and local governments to corporations take precedence over their contractual obligations to public employees?
Why should state and local governments be permitted by the courts to abandon their contractual obligations in order to make discretionary public expenditures?
Should pension plan sponsors have the ability to legally alter “automatic” statutory COLAs as opposed to “ad hoc” COLAs?
Do statutory COLA provisions somehow enjoy a lesser status in the law, less weight or force in the law, relative to all other statutory DB pension provisions?
As I understand it, state and local government contributions to their defined benefit plans are a fraction of (single digits) state and local government expenditures for all other purposes. What level must this ratio reach before a public plan is in a “crisis?”
Should plan sponsors have the ability to take fully-vested pension benefits from retirees before they have impacted the partially-vested pension benefits of current employees (see Colorado PERA, SB 10-001)?
Should the federal courts weigh in on state violations of state contracts (to the benefit of the states) or should state courts be the final arbiters?
Enquiring minds.
(P.S. All of you PERA retirees, open a Facebook account and begin following the PERA news on saveperacola’s Facebook page. Also, get all of your retired PERA buddies to do the same!)
PERA REFORM BALLOT INITIATIVE SUBMITTED TO LEGISLATURE.
The Colorado Legislature has prepared a summary of a PERA reform ballot initiative (#73) that was submitted a few weeks ago. There was a hearing at the Capitol about the initiative last week. There is a huge gap between merely submitting a proposed initiative to the Legislature and actually acquiring all of the signatures statewide needed to make the ballot (not to mention the stacks of money it takes to run an initiative campaign.)
In a nutshell the initiative would: put PERA under the auspices of Office of State Planning and Budgeting, alter membership on the PERA Board, allow changes to pension contribution levels under “actuarial necessity”, alter requirements that must be met to retire starting in 2013, require new hires to join a PERA defined contribution plan (401K plan) starting in 2013, and make all PERA information and documents open to the public.
Concerns? Would putting PERA under the OSPB allow for interference with the performance of PERA’s fiduciary duties? Would altering the membership of the PERA board reduce the influence of retirees and members? Do we really want to enshrine the concept of “actuarial necessity” in the law, given that is essentially a contrivance to allow public pensions to avoid paying their debts? What impact would moving new employees into a 401K plan have on PERA’s future funded status?
Here’s the Legislature’s description of the proposal:
Purposes
The major purposes of the proposed amendment appear to be:
1. To include amounts deducted from pay for a cafeteria plan and transportation costs in the
definition of salary for purposes of the statutory provisions governing the public employees’
retirement association (PERA).
2. To create exceptions to the existing statutory provision specifying that PERA shall not be
subject to administrative direction by any department, commission, board, bureau, or agency
of the state by giving the office of state planning and budgeting (OSPB) administrative
oversight over PERA, which oversight will be funded by the general assembly, and by
requiring PERA to make an annual presentation of its budget to the joint budget committee
of the general assembly.
3. To abolish the current PERA board of trustees (board) on January 1, 2013, and to terminate
the terms of its members serving immediately prior to that date.
4. To create a new PERA board, effective January 1, 2013, and to specify that the board shall
be comprised of the state auditor and the state treasurer, three people with certain
qualifications to be appointed by the governor, two members or retirees of the PERA defined
benefit plan elected by the members of that plan, and two members or retirees from the
PERA defined contribution plan elected by members of that plan.
5. To specify certain details concerning the appointment and election of members to the PERA
board and their terms of office, the limitation on the number of terms a board member may
serve, how vacancies are filled, and the compensation and training requirements for members
of the board.
6. To require the PERA board to submit an initial report to the general assembly with a
preliminary assessment of PERA’s financial status, including the defined benefit plan, and
preliminary recommendations for improving PERA’s financial stability.
7. To require the PERA board to contract with a private auditor to conduct an independent
financial performance audit every two years of all transactions and accounts of PERA, and
to be staggered with the audit conducted by the state auditor.
8. To require the PERA board of trustees to determine the appropriate investment objectives
for the defined benefit plan and, after reviewing recommendations from two financial
institutions, adopt investment policies for each of the funds entrusted to the board.
9. To reduce the maximum amortization period that is deemed actuarially sound for the defined
benefit plan trust funds from forty to thirty years and to specify that an actuarial necessity
shall exist when the defined benefit plan is not actuarially sound.
10. In the event of an actuarial necessity, to authorize the general assembly to modify the
member and employer contributions and the benefits allowed to members of the defined
benefit plan, so long as the benefits of members who are eligible for a service retirement
benefit or a reduced service retirement are not modified.
11. To prohibit the attorney general from delegating his or her responsibilities as legal advisor
to the PERA board to any legal advisor or in-house counsel hired by PERA and to require
PERA to hire legal advisors to serve as in-house counsel for PERA’s staff.
12. To increase the age and service requirements for service retirement benefits to sixty years old
and thirty years of service for a PERA member who is not a state trooper, who is less than
40 years old on or before January 1, 2013, and whose retirement benefits have not vested on
or before that date.
13. To require the general assembly to conduct an actuarial study before increasing benefits for
any member in the defined benefit plan to ensure such increase would not cause the value of
PERA’s assets to be less than 90% of PERA’s actuarial accrued liabilities.
14. To abolish the current defined contribution plan and create a new defined contribution plan
on January 1, 2013, which shall include employees hired on or after January 1, 2013,
employees who were members of the former defined contribution plan, and members who
were part of the defined benefit plan but who are eligible to become members of the defined
contribution plan and elect to do so.
15. To require each member of the new defined contribution plan to contribute an amount equal
to 2% less than the employer contribution rates specified for the defined benefit plan.
16. Beginning January 1, 2013, to increase contributions by employees in the defined benefit
plan by one-half of one percent of the employee’s salary annually until the amount of the
employee contribution is equal to the amount of the employer contribution.
17. To authorize members in the defined contribution plan to make additional contributions to
the member’s individual account, and to specify the methods of transmitting and crediting
contributions to a member’s individual account for those enrolled in the defined contribution
plan.
18. To require an employer of a member of the defined contribution plan to contribute the
following percentages of the member’s salary to the member’s individual account: 8% for
members in the state, school, and local government divisions, 10% for members who are
state troopers, and 11% for members in the judicial division.
19. To require the difference between the employer contribution rates specified in statute for the
defined benefit plan and the contribution rate paid by the employer into the defined
contribution plan pursuant to the proposed initiative to be used to pay off unfunded liabilities
in PERA’s defined benefit plan.
20. To require any savings resulting for the administration of the defined contribution plan to be
used to pay the unfunded liability of the defined benefit plan.
21. To reduce the employer contribution rate to the new defined contribution plan to a rate two
percent less than the division membership employer rate for the defined benefit plan and cap
employer contributions at that rate when the new pension plan has eliminated unfunded liabilities and is fully funded so as to meet the federal guidelines for state pension plans of
funding one hundred percent of liabilities over a thirty-year period.
22. To specify procedures concerning the limitation on annual contributions, rollover
contributions, vesting, and member control of investments.
23. To require the PERA board to select at least five investment alternatives for members, to
allow members to change investments regularly, to provide members with information
describing investment alternatives, and to designate, subject to certain conditions, the
companies from which investment products shall be purchased.
24. To specify that PERA and the employer are not responsible or liable for financial losses
experienced by members of the defined contribution plan.
25. To require the PERA board to determine distribution options by which a member of the
defined contribution plan may elect to receive the distribution of his or her individual
account.
26. To specify that members of the defined contribution plan may participate in PERA’s optional
life insurance, long-term care insurance, voluntary investment program, and health care
program.
27. To require the PERA board to provide members with quarterly reports regarding the
members’ accounts and administrative fees charged to members.
28. To authorize members of PERA’s defined benefit plan to make an irrevocable election to
participate in the defined contribution plan in lieu of the defined benefit plan, subject to
certain eligibility requirements.
29. To provide for the transfer to the defined contribution plan of a member’s individual account
and the matching employer contributions to which the member would be entitled at the time
of the transfer and to specify the requirements for the transfer.
30. To require all information, publications, documents, and other communications and materials
produced, received, housed, or used by PERA and PERA employees to be transparent and
open to public inspection pursuant to article 72 of title 24, C.R.S.
31. To require all PERA board meetings and meetings between members of the PERA board to be open under the Colorado Sunshine Law.
EDITORIAL: FLORIDA GENERAL ASSEMBLY OVERREACHES IN TAKING PENSION BENEFITS, WASTES TAXPAYER DOLLARS ON LITIGATION.
Here’s the editorial:
http://www.tampabay.com/opinion/editorials/article1218839.ece
Colorado PERA, as an economizing measure I ask that you consider legal, prospective pension reforms in the future. Just a suggestion. Al
THE GREAT COLORADO PENSION HEIST OF 2010: MEMORABLE UTTERANCES FROM OUR LEADERS.
If you’re like me, and you simply cannot get your fill the public pension theft debate raging in the hearts of Americans, then perhaps you’ll enjoy this retrospective of noteworthy quotations from the 2010 Colorado pension theft debate.
As is often reported in the press, we Coloradans excel in all areas of human endeavor . . . and pension theft is no exception. Our 2010 pension theft bill (SB 10-001) was bold, brazen, ruthless, depraved . . . exemplifying that western “can do” spirit.
I’ll kick off the retrospective with one of my personal favorite pension theft quotations:
Joel Judd, Chairman, House Finance Committee:
During the hearing on Senate Bill 10-001 Judd stated (near the end of the hearing) that SB 10-001 (the “COLA theft bill”) must be supported “because that’s where the money is.”
Senators Josh Penry and Greg Brophy: “Fully 90 percent of the PERA fix comes from benefit cuts to current and future retirees.”
Greg Smith, Colorado PERA General Counsel: “The attorney general’s opinion seems clear that fully vested employees – those retired or with enough years of service to retire – cannot see any benefits reduced, including cost-of-living adjustments.” (Link: http://www.denverpost.com/news…
Greg Smith, PERA before the Joint Budget Committee on 12-17-09: “The statutes are in fact binding, and they are constitutionally protected from reduction.”
Greg Smith, PERA General Counsel: Reilly Pozner has “really talented people. I certainly couldn’t get a job there.” (Link: http://www.prweb.com/releases/…
Meredith Williams, Colorado PERA Executive Director: “The AG’s opinion states that when a PERA member retires and begins receiving pension benefits such member’s pension rights have fully vested and such pension benefits may not be reduced.”
Representative DelGrosso (in February): “I voted against SB 1, not because I didn’t think we needed to fix PERA, I agreed with that part of it, but I voted against Senate Bill 1 because it did adjust some of the COLAs, and it did adjust that for folks that were already retired and people that were about ready to retire,” said DelGrosso. “And to me, I felt like that was violating the contract that those people got into.”
From the 2010 debate on SB 10-001:
Rep. Lambert: “I have heard from my constituents, as many of you have, that this proposal will breach retiree’s contracts.”
Rep. Swalm: “We’re breaking new territory in this state by trying to reduce the COLA. We’re probably going to get a lawsuit out of that. If we cut the 3.5 percent COLA there will be a lawsuit.”
Rep. Gerou: in committee, said that it is a disservice to the state to rush a bill through when her committee knew that it will go to litigation, and said what we are doing to the retirees is wrong.
Rep. DelGrosso: said that it is “tough” for him to tell people that he is going to break their contract.
Senator Harvey: “We have made a commitment. We have a contract with current retirees. That is already in place. Reforms should be made for new hires. We do not have that commitment to new hires.”
Senator Spence: “The bill places an unfair burden on retirees.”
Senator Scheffel: “We are breaching our promises to existing retirees.”
Senator Lundberg: “This bill is a deal that was cut before this body met.”
Rep. Jack Pommer, JBC Chairman to JBC on 12-17-09: “Are we not just saying we’re going to pick 30 years (as a PERA investment time horizon) because if we’re not balanced within 30 years that creates actuarial necessity which then let’s us change retiree benefits?”
Colorado PERA: “In any event, members and retirees with fully vested rights and entitlements provided by the PERA statutes will not suffer any impairment of those rights and the Board of Trustees will continue to fight to protect the PERA membership.”
Colorado PERA: Retirees “will receive an automatic increase of 3.5 percent in their monthly retirement benefit to help keep up with the cost of living.”
Colorado PERA: “If you began PERA membership on or before June 30, 2005, you will receive an annual increase of 3.5 percent.”
Colorado PERA Update – (Spring 2006 – page 4): “See that PERA’s (actuarial) funded status was lower (61.5 percent) 30 years ago than what it is now. You may recall that there was no perceived “crisis” in PERA’s funded status in 1975.”
Colorado PERA News Archive for 2004 (9-16-2004): “PERA’S funded level was below 60 percent in 1970, and there was not a perceived crisis in PERA’s financial health.”
Mike Coffman’s “Commission to Strengthen PERA”: “For those Coloradans already collecting benefits from PERA, their retirement funds must be protected. The Commission may not make any recommendations that materially affect current retirees.”
Colorado Supreme Court, in Denver Police Pension and Relief Board, 1961: When conditions are satisfied for retirement . . . . “at that time retirement pay becomes a vested right of which the person entitled thereto cannot be deprived; it has ripened into a full contractual obligation.” “Whether it be in the field of sports or in the halls of the legislature it is not consonant with American traditions of fairness and justice to change the ground rules in the middle of the game.”
Colorado Supreme Court, in Colorado Springs Firefighters v. Colorado Springs, 1989: “Rights which accrue under a pension plan are contractual obligations . . . entitlement to annual pension payment increases is also statutorily determined. These statutory provisions have established a defined benefit contributory pension system in which most public employees are required to participate . . . . . By making these contributions, employees obtain a limited vesting of pension rights, which ripen into vested pension rights upon attainment of the respective eligibility requirements.”
PERA Hires the Lobbying Troop (how many? 12 to 20?):
State Bill Colorado article, regarding the initial recruitment of the PERA lobbying troop: “PERA is obviously gearing up for some heavy-duty lobbying, one observer noted. The agency has hired two lobbyists from the firm Colorado Communiqué, Collon Kennedy and Steve Adams, former president of the Colorado AFL-CIO. The pension system also has hired Mary Alice Mandarich, a well-connected Democratic lobbyist who formerly was chief of staff for Senate Democrats and who worked on campaigns for former Senate President Joan Fitz-Gerald, former Gov. Roy Romer and gubernatorial candidate Gail Schoettler.”
Is it normal for public pension administrators to hire a lobbying troop?
Jeanne Chenault, spokeswoman for the Virginia retirement system: “We do not take positions on bills, we provide information on bills.”
Denver Post Editorial Board in the piece AFirst, let court rule on PERA”: “Before legislators take on reforms, they should first ask the state Supreme Court to determine how much leeway they have.”
John Bury, Actuary: “Giving a government the ability to renege on a contract at their convenience means the end of any pretense to democracy.”
Algernon Moncrief (pension rights blogger): “Senate Bill 1 is a contrivance designed to permit defined benefit plan sponsors to escape their debts.”
Visit saveperacola.com, support the pension theft lawsuit, Like saveperacola on Facebook!
KANSAS CONSIDERS USING CASINO REVENUES TO MEET ITS PENSION OBLIGATIONS.
Colorado PERA, is this a trend? Our neighbor Kansas has come up with a LEGAL, PROSPECTIVE means of meeting their contracted pension obligations. They’re following the recent example of the New York Legislature.
The suggestion in Kansas is . . . wait for it . . . that Kansas honor its contractual pension obligations!
In my view this Kansas proposal does have merit. Under the plan, KPERS administrators need not take time off from meeting their fiduciary duties, in order to lead a parade across the state. A parade that is, to hoodwink a few KPERS retirees into agreeing to abandon their contracted pension benefits.
KPERS need not hire a troop of lobbyists (using the funds of KPERS retirees) to force an unconstitutional bill through the Kansas Legislature.
Kansas taxpayers need not finance the litigation that is a natural consequence of the illegal taking of property.
Read all about the Kansas idea right here:
http://news.yahoo.com/kansas-plan-uses-casinos-boost-pension-system-185115515.html
FLORIDA COURT OF APPEALS SENDS PENSION CASE DIRECTLY TO FLORIDA SUPREME COURT.
“The state appealed a Leon County circuit judge’s ruling last week that the contribution requirement violated the state’s constitution, and the First District Court of Appeal on Friday passed the case to the Supreme Court without taking any other action.”
Here’s a short article:
http://www.palmbeachpost.com/news/state/challenge-of-floridas-forced-pension-contribution-law-goes-2242545.html
CHECK IT OUT COLORADO PERA: LEGAL, PROSPECTIVE PENSION REFORM IS AN OPTION AFTER ALL. WHO KNEW?
The NY Legislature has just adopted a pension overhaul without a hint of theft about it. They understand that fully-vested defined benefit pension retirees bear no market risk. They realize that these retirees participate in a DEFINED benefit plan, not a VARIABLE benefit plan.
Here’s the article:
http://www.pionline.com/article/20120315/DAILYREG/120319938/new-york-legislature-approves-pension-overhaul
CALIFORNIA JUDGES FILE NEW COLA LAWSUIT.
Here’s a short article about the case:
http://www.courthousenews.com/2012/03/15/44718.htm
Interesting Bloomberg article addressing the turning tide in judicial support for vested pension benefits.
“States have run into legal trouble by changing promised benefits, said Snell of the NCSL.”
Here’s a link:
http://www.bloomberg.com/news/2012-03-08/billion-dollar-florida-pension-battle-shows-challenge-of-cutting-benefits.html
COLA LAWSUIT VICTORY IN FLORIDA! – FLORIDA JUDGE: IT’S ILLEGAL TO TAKE EVEN FUTURE COLA ACCRUALS FROM EMPLOYEES, LET ALONE COLA BENEFITS THAT HAVE ALREADY BEEN EARNED AND ACCRUED (SEE: COLORADO GENERAL ASSEMBLY, SB1.)
The Florida Legislature attempted pension reforms that were not nearly as aggressive, in terms of risk of unconstitutionality, as those adopted by the Colorado General Assembly. Nevertheless, the Florida Legislature has been smacked down by the courts.
Here are some noteworthy portions of the Florida ruling:
“This court cannot set aside its constitutional obligations because a budget crisis exists in the state of Florida. To do so would be in direct contravention of this court’s oath to follow the law.”
“To find otherwise would mean that a contract with our state government has no meaning.”
“There was certainly a lawful means by which they could have achieved the same result.”
“Florida law is clear that a legislature can, as part of its power to contract, authorize a contract that grants vested rights which a future legislature cannot impair.”
“The elimination of the future COLA adjustment alone will result in a 4 to 24% reduction in the plaintiffs total retirement income. These costs are substantial as a matter of law.”
“Where the state violates its own contract, complete deference to a legislative assessment of reasonableness and necessity is not appropriate because the state’s self-interest is at stake.”
“All indications are that the Florida Legislature chose to effectuate the challenged provisions of SB 2100 in order to make funds available for other purposes.”
“If a state could reduce its financial obligations whenever it wanted to spend the money for what it regarded as an important public purpose, the Contract Clause would provide no protection at all.”
“The Takings Clause is intended to prevent the government from forcing some people alone to bear public burdens, which in all fairness and justice should be borne by the public as a whole.”
“Defendants are further ordered to reimburse with interest the funds deducted or withheld . . . from the compensation or cost-of-living adjustments of employees who were members of the FRS prior to July 1, 2011.”
Here’s a link to the decision in Florida:
http://judicial.clerk.leon.fl.us/image_orders.asp?caseid=49809133&jiscaseid=&defseq=&chargeseq=&dktid=87117441&dktsource=CRTV
Here’s hoping that one day Justus will prevail in Colorado.
FLORIDA BECOMES THE THIRD STATE TO RECENTLY HAVE ITS HIKE IN PENSION CONTRIBUTIONS RULED UNCONSTITUTIONAL.
The Colorado Legislature has also taken this step, but has not yet been challenged in court. I just see these recent rulings as more evidence that legislative bodies across the country have enacted pension reforms with no regard to the constitutionality of the legislation. Legislators should apply a simple test to any proposed pension reform prior to voting on it. They should ask themselves, does this bill attempt to take accrued, earned pension benefits. If the answer is “yes”, they might consider alternative, prospective pension reforms. Is this so difficult to comprehend?
The quotation below from the Florida attorney who filed the lawsuit could just as easily address the theft of the COLA in Colorado:
“The employees have a contractual right to their pensions and this court recognized that even if the governor and the Legislature choose not to. This is important. We are a society of laws. This court has said even the powerful have to follow the laws. This was a gamble that the governor and Legislature made last year. They gambled taxpayers’ money that they could balance the budget on the backs of the hard-working public employees of the state. They lost that bet today.”
Here’s the link to the article:
http://www.firstcoastnews.com/comments/245606/4/Momentous-ruling-on-Floridas-pension-contribution-law
COMEDY CENTRAL: COLORADO STATE HOUSE COMMITTEE IS FEARFUL OF ENCROACHING ON PERA MEMBER VESTED RIGHTS.
The Colorado House Finance Committee has adopted a bill to change the calculation of the base benefit at retirement for PERA members. The bill was amended in committee in order that it not impact the rights of current employees vested in the pension plan (five years of service.)
“House Bill 1150 would require an employee’s pension be based on seven years of the highest salary, rather than three years. Priola, R-Henderson, amended it to affect only new hires or those with less than five years of service.”
Here is the complete Denver Post article:
http://www.denverpost.com/breakingnews/ci_20079751
It must be quite uncomfortable for certain committee members to live day-to-day with this colossal burden of cognitive dissonance.
On one hand, the committee’s amendment to HB 1150 demonstrates their concern to avoid treading on the vested rights of current employees.
On the other hand, the committee members are part of an organization that has recently enacted SB1, which trampled and casually discarded the fully-vested, contracted pension rights of PERA retirees, rights that were earned and accrued over a thirty-year period, rather than a five-year period.
State legislators must realize that these two policy positions are mutually exclusive. You cannot be both a champion of vested pension rights of current employees, and a butcher of vested pension rights of PERA retirees.
STATE REP. DELGROSSO: SB 1 WAS A CONTRACT VIOLATION.
“I voted against SB 1, not because I didn’t think we needed to fix PERA, I agreed with that part of it, but I voted against Senate Bill 1 because it did adjust some of the COLAs, and it did adjust that for folks that were already retired and people that were about ready to retire,” said DelGrosso. “And to me, I felt like that was violating the contract that those people got into.”
Here’s a link to the article in The Colorado Statesman:
http://coloradostatesman.com/content/993329-legislator-spikes-his-own-bill
Congratulations to Rep. DelGrosso for stating what should be obvious to all Colorado legislators, taking a benefit that is contracted, fully-vested, accrued and earned over a thirty year period is wrong, and I believe immoral.
MAINE RETIREES JOIN THE BATTLE AGAINST LEGISLATORS WHO WOULD ABANDON CONTRACT LAW IN THE U.S. – FILE COLA THEFT LAWSUIT IN FEDERAL COURT.
Here’s the news article:
http://www.pressherald.com/news/retirees-group-sues-state-over-benefit-changes_2012-02-14.html
Here’s the retiree association that filed the lawsuit:
http://www.maineretirees.org/mar-suit.htm
. . . . and a PDF of the class action lawsuit itself:
http://www.maineretirees.org/MAR-suit.pdf
ARIZONA AND NEW HAMPSHIRE EMPLOYEE PENSION CONTRIBUTION INCREASES RULED UNCONSTITUTIONAL – (LAST OCTOBER A COLA THEFT LAWSUIT WAS ALSO FILED IN ARIZONA, IT HAS NOT YET BEEN DECIDED.)
Here’s an article on the Arizona pension contribution ruling:
http://www.azcentral.com/news/politics/articles/2012/02/03/20120203arizona-pension-law-ruled-unconstitutional.html
“The reforms increased employee contribution rates from 50 percent to 53 percent of total funding in a move to save the state $60 million.”
“Judge Eileen Willett noted in her ruling that the state Constitution describes the public retirement system as a contractual relationship between the state and its employees and that state statutes forbid laws “impairing the obligation of a contract.”
“When the plaintiffs were hired as teachers, they entered a contractual relationship with the State regarding the public retirement system of which they became members,” Willett wrote. “Their retirement benefits were a valuable part of the consideration offered by their employers upon which the teachers relied when accepting employment.”
Donald Peters, the lead attorney for the teachers, said, “The judge found that the state has to abide by the promises it made to its employees.”
Here’s an article on the New Hampshire pension contribution ruling:
http://www.plansponsor.com/NH_Court_Says_Increasing_State_Employee_Pension_Contributions_Illegal.aspx
Here’s an article on the undecided Arizona COLA theft lawsuit:
http://www.azcentral.com/business/abg/articles/2011/10/06/20111006abg-fischer1006.html
(Note that this COLA theft lawsuit was filed in both state and federal courts, by retired state judges.)
HICKENLOOPER PROPOSES FURTHER THEFT OF CONTRACTED PERA RETIREMENT BENEFITS.
“He said options the state could consider include reducing inflation adjustments for retirees, raising the retirement age for new hires and averaging employees’ last five years of earnings to determine pension payments rather than the last three years.”
See this article in The Pueblo Chieftan:
http://www.chieftain.com/hickenlooper-talks-energy-water-pensions/article_25f92ef8-4ef1-11e1-a99f-001871e3ce6c.html
Hickenlooper appears to have little concept of the state’s legal and moral obligations to the people who have worked long and hard to provide critical services to the people of Colorado.
His CEO mentality that assumes he can sweep away anything he decides upon, at our expense, is imperious, undemocratic and dangerous.
What is happening with last year’s appeal?
Our appeal brief was filed in December and we are awaiting the state and PERA’s response. Then it’s up to the Colorado Court of Appeals to decide whether to remand the issue for trial in the district court.
“Giving a government the ability to renege on a contract at their convenience means the end of any pretense to democracy.” John Bury
http://burypensions.wordpress.com/2011/11/18/lawyers-defining-the-public-good/#more-1602
Update on the Rhode Island COLA theft attempt: Rhode Island’s Treasurer – the state’s proposed COLA theft bill could ultimately be heard by the US Supreme Court.
Here’s the full story:
http://blogs.wpri.com/2011/10/22/raimondo-fires-back-at-fung-says-courts-will-back-pension-bill/?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+wpri-nesis-notes+%28WPRI.com+Blogs+%C2%BB+Nesi%E2%80%99s+Notes%29
WHAT IS THS SCALE OF THE CRISIS THAT PROMPTED THE COLORADO LEGISLATURE AND PERA TO STEAL RETIREE ASSETS, THEFT OF THE CONTRACTED COLA?
HERE IT IS QUANTIFIED . . . ONE-TENTH OF ONE PERCENT OF FUTURE STATE INCOME.
I just came across this study at the Pension Rights Center, The Origins and Severity of the Public Pension Crisis, produced by the Center for Economic and Policy Research.
Here’s a link:
http://www.cepr.net/documents/publications/pensions-2011-02.pdf
The report states that the shortfalls facing state and local pension plans have been misrepresented. Further, the study notes that, “when expressed relative to the size of their economies, most states are facing shortfalls that appear easily manageable.” For example, unfunded liability as a percent of future state income for the Colorado PERA State Plan is approximately one-tenth of one percent of future state income, 0.09 % (See page 11 of the report.)
NEW BOOK CHRONICLES PRIVATE SECTOR PENSION THEFT.
Retirement Heist, by Ellen Schultz outlines the machinations used to steal private sector retirement benefits in recent decades.
The private sector pension thieves have a kindred spirit in Colorado PERA which, apparently, is seeking to introduce such techniques to public sector pensions. The book is a good read for Colorado PERA members and retirees. See discussion at the burypensions blog, or this review (the book is too technical, but edifying) at the NYT:
http://www.nytimes.com/2011/09/18/business/when-retirees-are-shortchanged-for-corporate-profits.html
RETIREES WIN IN RHODE ISLAND PENSION LAWSUIT, ILLEGAL TO TAKE THE CONTRACTED COLA, EVEN FROM THOSE NOT YET ELIGIBLE TO RETIRE.
Here is an article and the ruling:
http://newsblog.projo.com/2011/09/update-judge-rules-for-ri-unio.html
http://www.projo.com/news/2011/pdf/council94_v%20_carcieri_0913.pdf
“The case law does not preclude but rather supports this Court’s holding that Plaintiffs, as ten-year veterans of the State, possess a contractual relationship with the State pertaining to retirement allowances and COLA benefits which are not subject to collective bargaining.”
ALERT AARP OFFICIALS HAVE DETECTED A THREAT TO PUBLIC PENSIONS!
Here’s an article regarding AARP’s response to proposed pension reforms in Rhode Island. Where have they been in recent years? I don’t recall AARP voicing any objections to Colorado’s COLA theft. If AARP does not defend the rights of retirees, why do they exist?
http://www.projo.com/generalassembly/pension_debate_begins_09-06-11_R2Q3239_v51.6fafa.html
Want to read the New Jersey federal COLA theft lawsuit? Here it is:
http://www.njea.org/njea-media/pdf/2011PensionComplaint.pdf?1315002364319
NEW JERSEY COLA THEFT LAWSUIT FILED IN FEDERAL COURT.
A lawsuit will also be filed in state court shortly.
http://www.nj.com/news/index.ssf/2011/08/nj_unions_public_workers_sue_t.html
PENSION LEGAL EXPERT PROFESSOR AMY MONAHAN ADDRESSES THE COLORADO COLA LAWSUIT.
On Wednesday, August 10, a segment of a conference held by the National Association of State Legislatures addressed financial and legal issues relating to public pensions.
The full agenda for the conference is here:
http://www.ncsl.org/default.aspx?tabid=23366
Professor Amy Monahan, of the University of Minnesota School of Law, discussed these legal issues, and commented on options that states might take before violating contracts. Watch the video here, she is the second speaker, her Colorado COLA comments are about 40 minutes into her talk:
http://www.ncsl.org/?tabid=23412
Here are some notes from her talk.
She raised the issue, “When does the right to a COLA vest?”
She summarized the Colorado and Minnesota rulings in careful language.
She said that the courts are looking at reasonable expectations of pension members to receiving a COLA.
She noted that the ruling in Colorado (and likely the Minnesota ruling) are being appealed, and that it will be awhile for the cases to play out.
She said that Minnesota’s pensions plans were not about to run out of money.
She said that Colorado courts, in the past, have adopted the “California rule” protecting accrued pension rights, including COLAs. The Colorado Supreme Court has signed off on this analysis.
She noted that the Colorado legislature enacted the 3.5% compounding COLA about ten years ago.
She pointed out that the district court ruling in Colorado argued that the COLA has been changed many times in the past, and used this as justification for the SB10-001 change. However, she said that her understanding is that all of these changes that were made in the past to the COLA were beneficial changes for the retirees. (My comment: thus, there was no contract violation from these past changes and these changes cannot be used as a justification for the seizure of accrued, contracted COLA benefits in 2010.)
She is mistaken on one issue raised in Colorado District Court Ruling. She thinks that all of Colorado’s retirees signed a document stating that they understand that the COLA could change. She said that she has not yet been able to get her hands on a copy of this document.
She should be contacted and informed that this is not the case that all retirees signed such documents.
From the question/answer session: She does not know what the obligation of states is in regard to Social Security benefits and pensions, for states that have opted out of Social Security.
Comments on state pension case law: “This area of law is messy.” “The issue of future accruals is not settled.” “There’s room to make arguments on all sides.” “It’s common law, it takes one court to disagree (about the California Rule) . . . that’s the difficulty here.”
I agree that if I had known PERA was in trouble I wouldn’t have retired. However, when I was at the table I was assured everything was secure, no problems, HA! shame on somebody. Now I hear Hic wants a bite at the apple, wasn’t City of Denver retirees enough? May need to start rallying folks.
I want to thank those who are appealing this case I feel they are also doing this for all who pay into Pera as well, one day we all have to retire..
and what is wrong with, Hickenlooper wanting to borrow from PERA
He also needs to be stopped, my money goes into Pera, I don’t want to lend it to him………….
Good!
I’m sending a donation today to help support this appeal.
Thank you to the plaintiffs and everyone who keeps working at this.
Get ready for the Denver Post and KOA to rev up their anti PERA campaigns. SavePERACOLA will need a PR person just to counter the misinformation these organizations will disseminate to stir up anti PERA sentiment. I know as fact, that if I had even the *SLIGHTEST* indication that the ABI would, or could, be cut, or eliminated, I would never have retired. I would have stayed until they had to roll me me out on a gurney, costing my employer thousands. Ironically, when people retire, they save the state a lot of money, because they are at the top of their salary range, and their jobs are filled by workers at the lower end of the scale. Despite this, and the stated ABI commitment, the legislature still felt justified in looting the nominal Annual Benefit Increase and sticking it to PERA retirees. Year after year, and decade after decade, I received glossy mailings from PERA about the security, and sanctity, of PERA retirement – I wish I’d saved every one of them to deliver to Judge Hyatt. Here’s hoping a higher court sees things more favorably.
Ditto! I believe the judge received some of these glossy mailings from PERA showing the security and sanctity of PERA retirement.
Bravo !
Good. I like this. I especially like the part that starts out “Justus explained why this case must go forward. . . ”
How are we doing for funding? I’m ready to donate again. I just makes sense. Please let us know.
Thanks,
–John Kiljan
I have been donating on a regular basis, but once Judge Hyatt ruled against us I quit because I thought that was it. I’m glad to see the appeal and will resume contributing.
Robert Dorsey