Rhode Island Lawyers to Suss Out How Court Should Handle Pension Lawsuit

Rhode Island

At the end of this week, the lawyers representing Rhode Island and its retirees will meet with a Superior Court judge to discuss a major point of contention in the pension lawsuit brought against the state: how many trials should be held?

Lawyers for retirees argue that the lawsuit should be separated into multiple trials.

But the state, citing cost, is arguing for one trial.

More from the Providence Journal:

Lawyers for the Rhode Island Public Employees Retiree Coalition are pleading for a separate jury trial on their bid for reinstatement of their annual “cost-of-living adjustments,” which they see as the potentially more winnable case.

[…]

The state’s lawyers said separating the cases could put the state — and by extension, the state’s taxpayers — at a potential legal, tactical and financial disadvantage.

“If the retiree cases were tried first,’’ they said, “the evidence that would be submitted would include not just… the facts, circumstances and legislative changes pertinent to the retirees, but also all the evidence concerning… the reforms in 2005, 2009, 2010 as well as 2011… the evidence of how, and why, each separate group was addressed in each set of the legislative changes… and the reasonableness and necessity of the changes impacting each group under the totality of the circumstances facing the state.’’

Beyond that, “Governor Raimondo and former Governor Chaffee [sic] would have to testify at multiple trials, given that they were the Treasurer and Governor, respectively, at all times relevant to these cases… This would prevent the Governor from attending to her official duties [if] she had to testify multiple times.’’

In fact, “all the [defendants’] witnesses would have to testify multiple times, including expert witnesses, at great expense to the State Defendants and the public fisc.”

Rhode Island is being sued by over 100 retiree and labor groups for its 2011 pension reforms, which raised the retirement age, suspended COLAs and shifted new workers into a 401(k)-style hybrid plan.

 

Photo credit: “Flag-map of Rhode Island” by Darwinek – self-made using Image:Flag of Rhode Island.svg and Image:USA Rhode Island location map.svg. Licensed under CC BY-SA 3.0 via Wikimedia Commons

South Dakota Pension Officials Brainstorm Ways to Guard Funding Status Against Another Market Downturn

South Dakota seal

If another market downturn comes, officials at the South Dakota Retirement System want to be ready. That’s why they spent their last meeting talking about what they could do to mitigate damage if another downturn comes and plagues fund investments.

Among the options discussed: lower the fund’s assumed rate of return and raising the retirement age of new hires.

More from the Rapid City Journal:

The system trustees began talks at their quarterly meeting last week about what might be done if the system’s portfolio drops below 100 percent of fair value.

They are looking at possible responses in different scenarios, such as another crash where the value keeps dropping to the 80 percent range or worse.

The fair value stood at 107 percent of long-term liabilities as of the June 30 end of the 2014 fiscal year.

Among the questions now are whether the assumed rate of return for investments is too high at 7.25 percent annually and if so what should it be.

State investment officer Matt Clark said the council already is operating on an assumed rate of return that is less than the trustees’ assumption of 7.25 percent, because of the current conditions in the markets.

[…]

Trustees intend to take closer looks at various special benefits that aren’t available to all members because of their ages and marital status.

Trustees want costs and usage numbers for each of the special benefits.

Based on estimates using 2011-era use patterns, the special benefits are being subsidized by other members to the equivalent of about $1.6 billion in long-term liabilities.

That is approximately one sixth of the system’s current fair value.

Trustee Jason Dilges, who is the governor’s commissioner of finance and management, asked for analysis showing what would happen if various special benefits didn’t apply to new employees.

Administrator Rob Wylie emphasized during the several hours of discussions Thursday that nothing is close to a decision.

He said a fifth meeting might become necessary in 2015 because of the additional work, however.

One general consideration might be recommending that a higher retirement age of 67 be applied to new employees of the governments that are SDRS members.

State government and state universities are the largest members of the system. Many school districts, counties, cities, law enforcement agencies and special units of government participate as well.

State law requires corrective actions when the system’s value falls below 80 percent. The most recent corrective actions came in 2010.

One was the flexible cost of living adjustment that ranges from a minimum of 2.1 percent to a maximum of 3.1 percent depending on the system’s funded status each year.

The South Dakota Retirement System controls $10.6 billion in pension assets.

 

Photo credit: “SouthDakota-StateSeal” by U.S. Government. Licensed under Public domain via Wikimedia Commons

Los Angeles Pension Reforms Rescinded by Labor Board; City Will Appeal

640px-LA_Skyline_Mountains2

The Employee Relations Board, a five-member panel that handles labor complaints in Los Angeles’ City Hall, probably didn’t expect to become famous overnight.

But they’ve become a household name in Los Angeles this morning, after news broke that the Board voted to rescind a series of pension reforms passed by Los Angeles in 2012.

The Board ruled that city officials did not properly negotiate the reforms –which reduced pension benefits for new hires and raised retirement ages—with municipal employee unions. From the LA Times:

The Employee Relations Board voted unanimously Monday to order the City Council to rescind a 2012 law scaling back pension benefits for new employees of the Coalition of L.A. City Unions, on the grounds that the changes were not properly negotiated. That law, backed by Mayor Eric Garcetti when he was a councilman, was expected to cut retirement costs by up to $309 million over a decade, according to city analysts.

Ellen Greenstone, a lawyer for the labor coalition, described the vote as a “huge, big deal” — one that shows the city could not unilaterally impose changes in pension benefits on its workforce.

Coalition chairwoman Cheryl Parisi said in a statement that the reduction in benefits, which included a hike in the employee retirement age, “devalues middle-class city workers and their dedication to serving the residents of Los Angeles.

The city’s labor board is a quasi-judicial body that reviews complaints from unions, managers and individual employees. Under the city’s labor ordinance, the panel has the power to invalidate decisions by the council, said the board’s executive director, Robert Bergeson.

If council members do not agree with Monday’s decision, they can file legal paperwork seeking to have a judge overturn it, Bergeson said.

City officials have previously argued that changes in the retirement benefits of future employees do not need to be negotiated. The 2012 law rolling back benefits applied only to employees hired after July 1, 2013. Budget officials had hoped that the reductions would trim the city’s retirement costs by more than $4 billion over a 30-year period.

The board’s decision comes as the city’s contributions for civilian employee retirement costs have climbed from $260 million in 2005 to an estimated $410 million this year, according to a recent budget report.

Los Angeles, meanwhile, plans to appeal the board’s decision. From Bloomberg:

Los Angeles will appeal an administrative panel’s decision to roll back changes in public employee pensions that were expected to save as much as $4.3 billion over 30 years, a spokesman for Mayor Eric Garcetti said.

The second most-populous city’s Employee Relations Board concluded yesterday that officials failed to properly consult with municipal employee unions before pushing through the changes in a City Council vote in October 2012.

The city will appeal the board’s 5-0 vote in court, Jeff Millman, a spokesman for the mayor, said by e-mail. Millman said Garcetti, a 43-year-old Democrat, disagreed with the ruling, although Millman didn’t spell out the reasons.

Los Angeles was expecting to save between $3.9 and $4.3 billion over the next 30 years. If the city does indeed appeal the ruling, the reforms will then land in front of a judge, who will have the final say.

 

Photo: “LA Skyline Mountains2″ by Nserrano – Own work. Licensed under Creative Commons