By Ted Nesi and Tim White
PROVIDENCE, R.I. (WPRI) – Rhode Island’s government unions are going to court to challenge the landmark pension law championed by Treasurer Gina Raimondo and signed by Governor Chafee in November.
A coalition of the state’s public-sector unions filed suit Friday in Rhode Island Superior Court against the governor on behalf of state employees and teachers, municipal workers in the state-run Municipal Employees Retirement System and retirees already collecting pensions, Robert Walsh, executive director of the National Education Association Rhode Island teachers union, told WPRI.com.
“While others have said they ‘followed the math,’ we follow the law,” Walsh said. “We believe this is a violation of the law, and that’s why we’re going to court.” The unions contend the law violates the due process, contract and takings clauses of Rhode Island’s state constitution.
“The state constitution in Rhode Island does not allow a contract to be broken and something to be taken,” he said. “We are contending that the Rhode Island Retirement Security Act is a violation of the Rhode Island Constitution.”
The law enacted in November has drawn national attention for saving billions of dollars by suspending retirees’ cost-of-living adjustments (COLAs) until the pension system is 80% funded and moving most current employees into a hybrid pension plan. All the law’s changes are scheduled to take effect on July 1.
Chafee and Raimondo issued separate statements Friday afternoon expressing confidence about the law’s legality. “This is not unexpected,” the governor said. “I always knew pension reform would be challenged in the courts.”
Raimondo described the law as “carefully designed by the General Assembly in an effort to save our state-administered retirement system.” She continued: “Treasury will work diligently to defend the important work done by the General Assembly.”
Superior Court Judge Sarah Taft-Carter, who has been handling all public-sector retirement challenges in recent months, met with lawyers from both sides Friday afternoon and denied the unions’ request to halt implementation of the law. She set a July 16 procedural hearing to discuss matters including consolidating the suits.
In April, Raimondo warned the impact on Rhode Island would be “devastating” if a judge throws out the new pension law. “If that law is repealed the municipalities will have to find $100 million next year alone,” she said. “You will see devastation, I believe, in municipalities not being able to pay those bills.”
Earlier this year, Walsh – who served on the pension advisory group convened by Chafee and Raimondo last year to examine the problem – has previously called on the treasurer to begin negotiations with the unions for a compromise on the pension changes to avoid a lawsuit. She rejected that idea.
“Now we’re in court, and we’re in court to win,” Walsh said. The unions will come to the table to discuss how to resolve the pension problem once the case is settled, which is what should have been done in the first place, he argued.
Walsh pointed to the fact that Rhode Island leaders say there isn’t enough money to pay promised pensions in full yet have pledged to pay off the moral-obligation bonds floated to fund Curt Schilling’s video game company, 38 Studios, even though the state is not legally obligated to do so. “We’re first in line,” Walsh said.
The union leader accused Raimondo of creating “a manufactured crisis” in 2011 by dropping the pension fund’s investment outlook from 8.25% to 7.5% in one fell swoop, which sharply raised the amount of money taxpayers needed to put into the fund. He said unions will tell a judge that other solutions weren’t considered.
“She went too far,” Walsh said of Raimondo.
The treasurer pushed back against that assertion on Friday. “The passage of the Rhode Island Retirement Security Act in November 2011 represented the culmination of 11 months of thoughtful, fact-based analysis and input from retirees, employees and taxpayers,” she said in a statement.