Rhode Island Supreme Court Upholds Pension Cuts

Court rules that suspension of cost-of-living adjustments was ‘fair.’

The Rhode Island Supreme Court has upheld reductions in state retiree pensions that had been approved by the General Assembly, and signed into law by then-Gov. Lincoln Chafee in 2011.

The ruling, in which the court said the pension cuts were “fair, reasonable, and adequate,” was a disappointment to the group of some 140 retired public employees who sought to overturn pension cuts that were intended to save taxpayers approximately $4 billion in unfunded pension liabilities.

“Economy is the method by which we prepare today to afford the improvements of tomorrow,” wrote Justice Gilbert Indeglia in his ruling, quoting Calvin Coolidge, the US president who presided over the run-up to the Great Depression.

“Rhode Island, unfortunately, failed to prepare for tomorrow,” Indeglia continued. “Its problems came to a breaking point in 2009, at the depth of the recession, at which time government officials realized they needed to address the depletion of funding in the state and municipal employee retirement systems.”

Looking to lower Rhode Island’s unfunded obligations to its workers, the 2011 pension law increased the minimum retirement age, suspended cost-of-living adjustments (COLAs), and moved workers into a new system that combined a reduced defined benefit with a defined contribution plan.

The cuts had been agreed on within a settlement that was reached between unions representing public employees, and the Chafee administration.  Although this occurred seven years ago, “I don’t think anybody directly impacted by the pension changes has forgotten,” Robert Walsh, the executive director of the National Education Association of Rhode Island, told The Providence Journal when arguments before the state Supreme Court began in April. “The retirees are reminded every paycheck from the state that their COLA is not there.”

Public employee unions sued, arguing that retirement benefits, particularly COLAs, were contractual promises that the state had broken. But in 2015, a Superior Court judge approved the proposed settlement. Although most public employee unions went along with the settlement, several groups of retirees hired their own lawyers to fight the benefits reductions.

“I could not sit back and let this happen without a legal fight,” Joseph Clifford, the lead plaintiff, told The Journal at the time. “I don’t think anyone thinks this is a good settlement. The people I talk to are furious. They feel like they were sold down the drain.”

However, even if the retirees had won the case, it was not certain they would have been repaid the money they say they were owed. According to The Journal, the lawyers representing the state told the court that it is “by no means clear that either the state or [the] municipal defendants would, in fact, be able to afford the cost of restoring [their] benefits.”

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