State Net Capitol Journal: Courts Reject Ambitious Pension Reforms

State Net Capitol Journal: Courts Reject Ambitious Pension Reforms

A pair of district courts have ruled that recent public pension reforms in Arizona and New Hampshire boosting the share current workers must contribute toward their retirement are unconstitutional. 
 
The courts ruled that both states broke their contracts with public employees because the contracts guarantee those workers will not have to pay more for benefits once they are hired unless they receive better benefits in return. 
 
"The state has impaired its own contract," concluded Maricopa County Superior Court Judge Eileen Willett. "By paying a higher proportionate share for their pension benefits than they had been required to pay when hired, [state workers] are forced to pay additional consideration for a benefit which has remained the same." 
 
Arizona and New Hampshire are among 10 states that targeted pension reforms at current employees last year; most other states took the safer legal route of focusing solely on new hires. And although a district court ruling in one state isn't binding in another, the legal arguments used in Arizona and New Hampshire could be used to challenge the pension changes elsewhere. Lawsuits are already pending in several other states, including Florida, Nebraska and New Jersey. 
 
New Hampshire Sen. Jeb Bradley (R), who led the pension reform effort in his state, said unless lawmakers come up with a fix that is acceptable to the court, state worker layoffs will be unavoidable. 
 
"Between the cost of employee health care and retirement benefits, it will be impossible to deliver the services people expect from the state," he said. "There has to be a willingness by employee labor groups to accept changes or the public is going to change it for them through diminished job openings." 
 
Bradley added that policymakers "have to stick to their guns to preserve the reliability of the retirement system. We're going to keep after it in New Hampshire and I suspect other states will." 
 
But Robert Klausner, an attorney in Florida who specializes in public pension law, proposed an alternative approach: negotiating with the public employee unions, like Vermont did in 2010, getting workers to agree to retire later and pay more for their benefits by offering them a larger pension check. 
 
"A deal everyone makes doesn't end up at the courthouse," Klausner said. (STATELINE.ORG, MIAMI HERALD)  

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