The US Supreme Court has declined to hear the case of Cranston, Rhode Island’s decision to suspend cost of living adjustments (COLAs) for some of the city’s police officers and firefighters.
The decision not to hear the case could have implications for other municipalities that are seeking to reduce previously promised benefits in order to shore up city finances.
“This gives people in other communities a little pathway to hopefully follow when they are facing similarly dire circumstances financially and a looming pension problem,” Cranston Mayor Allan Fung said, the Providence Journal reported.
The Cranston Police Retirees Action Committee had sued the City of Cranston, Fung, and the members of the Cranston City Council after the passage of two 2013 city ordinances. Both included a 10-year suspension of COLAs for retirees of the Cranston Police and Fire Departments enrolled in the city’s pension system.
Cranston’s finance director testified during court hearings that the COLA suspensions were necessary as raising taxes wasn’t a feasible option. He said the city would have had to raise taxes so substantially that it would have been unfair and unsustainable.
The Rhode Island Retirement Security Act, passed in 2011, includes a provision that allows for the suspension of COLAs if a system falls below 80% funded status in order to prevent changes to the core benefits package. During the trials, Fung testified that at the city’s pension system’s lowest point it was funded at only 16.9%, with $256 million of unfunded accrued liability.
The case made its way to the Rhode Island’s Supreme Court, which in June reluctantly upheld a superior court ruling that found that the city’s financial crisis made the move necessary and legally justified.
“It is with a decided lack of enthusiasm and only after prolonged research and reflection and hesitation that I concur in the result reached in the opinion of the court in this case,” Rhode Island Justice William Robinson, wrote in his opinion, “and I do so in a decidedly dubitante frame of mind.”
Fung said the pensions are currently funded at 23%.