High court sides with city in pension case

Opinion finds COLA freezes for police, fire retirees serve 'significant and legitimate public purpose'

By DANIEL KITTREDGE
Posted 6/5/19

By DANIEL KITTREDGE The city has again prevailed in a legal case involving local pension changes adopted in 2013. In an opinion issued Monday, the Rhode Island Supreme Court upheld Superior Court Judge Sarah Taft-Carter's 2016 ruling in favor of the city

This item is available in full to subscribers.

Please log in to continue

E-mail
Password
Log in

High court sides with city in pension case

Opinion finds COLA freezes for police, fire retirees serve 'significant and legitimate public purpose'

Posted

The city has again prevailed in a legal case involving local pension changes adopted in 2013.

In an opinion issued Monday, the Rhode Island Supreme Court upheld Superior Court Judge Sarah Taft-Carter’s 2016 ruling in favor of the city in the case Cranston Police Retirees Action Committee v. The City of Cranston.

“This is a historic day for Cranston, as by the Supreme Court upholding these changes, we are ensuring the long-term solvency of our locally administered police and fire pension plan,” Mayor Allan Fung said in a statement Monday afternoon.

Taft-Carter had found that the pension changes – which were adopted through a pair of ordinance amendments and a subsequent settlement agreement between the administration and the city’s police and fire unions – were undertaken for a “significant and legitimate public purpose.” The measures involved freezes on cost-of-living adjustments, or COLAs, for retirees.

That “significant and legitimate” purpose – for which “sufficient credible evidence” was presented through the testimony of city officials – was taking action in the face of an “unprecedented fiscal emergency” resulting from the Great Recession, the loss of state aid and the requirements of the 2011 Rhode Island Retirement Security Act, Taft-Carter wrote. Those circumstances, she found, were “neither created nor anticipated by the city.”

The Supreme Court’s opinion, authored by Chief Justice Paul Suttell, reads: “We, too, are of the opinion that the city has demonstrated a significant and legitimate public purpose for the passage of the 2013 ordinances … Although the plaintiff correctly points out that the underfunding of the pension system existed well before the passage of the 2013 ordinances, it is significant that, quite apart from the historic underfunding, the financial condition of the city and its pension system was greatly impacted by a number of circumstances in the years leading up to the passage of the 2013 ordinances.”

It continues: “Moreover, we agree with the trial justice’s conclusions that the 2013 ordinances were narrowly tailored to the problem and that the impairment was temporary and prospective in nature because the 2013 ordinances suspended a future benefit for a finite period of time. The 2013 ordinances did not eliminate the COLA benefit altogether, and only affected COLAs not yet made available to retirees. Thus, granting the trial justice due deference, we find no reversible error in her determination that a more moderate course was not available and that the impairment was reasonable in light of the circumstances.”

Fung has said the pension changes, which received the support of the city’s police and fire unions through a settlement agreement, will save taxpayers as much as $6 million annually.

In a statement Monday, he praised the Supreme Court’s opinion. He touted the victory as creating “precedent,” saying Cranston has become the “first government entity in Rhode Island to reform its troubled pension system while withstanding a full legal challenge.”

The outcome may bode well for Providence, which faces a similar legal challenge.

“I cannot thank enough the union members and retirees who came to the table, saw the math in front of us, and worked with us to right the ship so that the funds will be there for them in the future,” Fung’s statement reads. “As mayor, I have ensured that we fully funded our [annual required contribution, or ARC] and 100 percent of our [other post-employment benefits, or OPEB] obligations so that we are doing right by our workers.”

Fung’s statement also recognizes the work of attorneys William Dolan and William Wray on the city’s behalf.

“It was a lengthy process but the team did a phenomenal job throughout,” it reads.

The case stemmed from the City Council’s 2013 adoption of a pair of ordinance amendments providing for a 10-year freeze on cost-of-living adjustments, or COLAs, for fire and police retirees in the city’s pension system. Fung had proposed the freeze as a means of keeping the local pension system out of critical status, as defined by the state’s 2011 pension reform law.

Police and fire retirees subsequently filed suit, at which point Fung’s administration agreed to the settlement. Under the terms of that deal, COLAs were frozen every other year for the first 10 years, and capped at 1.5 percent in the 11th and 12th years and 3 percent for years 13 through 30. The settlement received judicial approval in December 2013.

Roughly 70 retirees opted out of the settlement agreement and formed the action committee, arguing that the city had under-funded its pension liabilities for years and that the COLA freeze constituted a breach of contract.

Comments

4 comments on this item Please log in to comment by clicking here

  • Dculmone

    I find it unbelievably wrong that the city of Cranston and Mayor Fung would freeze and take COLA dollars from retirees who worked hard for the city many years in sometimes poor conditions and work environments. He states that you fully funded benefit. I honestly don’t know if that is true or not but if you did you have taken the money to use elsewhere or this would not be an issue. Not only that but you have millions upon millions in a rainy day fund. These retirees counted on this COLA which was part of a contract in their retirement. Contracts be damned, I guess. Apparently it does not matter if you have a contract because a precedent has been set and it can be broken when politicians see fit. Shame on Mayor Fung and the City of Cranston. Mayor Fung, you really should remove that grin and I would ask you how do you sleep at night? If the answer is good it is because You don’t have a conscious.

    Friday, June 7, 2019 Report this

  • Dculmone

    I find it unbelievably wrong that the city of Cranston and Mayor Fung would freeze and take COLA dollars from retirees who worked hard for the city many years in sometimes poor conditions and work environments. He states that he fully funded benefits. I honestly don’t know if that is true or not but if he did he have taken the money to use elsewhere or this would not be an issue. Not only that but Cranston has millions upon millions in a rainy day fund. These retirees counted on this COLA which was part of a contract in their retirement. Contracts be damned, I guess. Apparently it does not matter if you have a contract because a precedent has been set and it can be broken when politicians see fit. Shame on Mayor Fung and the City of Cranston. Mayor Fung, you really should remove that grin and I would ask you how do you sleep at night? If the answer is good it is because You don’t have a conscious.

    Friday, June 7, 2019 Report this

  • SarahGH

    Great job Mayor Fung. You didn’t create the city’s problems but you work with the people to fix them. Much better than Raimondo or Elorza who force it upon us.

    Sunday, June 9, 2019 Report this

  • SarahGH

    Great job Mayor Fung. You didn’t create the city’s problems but you work with the people to fix them. Much better than Raimondo or Elorza who force it upon us.

    Sunday, June 9, 2019 Report this