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Rhode Island's Pension Battle Heads to Court

The battle over pension changes that state lawmakers made in 2011 will be resolved not through mediation but in court, the two sides said Friday.

By Randal Edgar

The battle over pension changes that state lawmakers made in 2011 will be resolved not through mediation but in court, the two sides said Friday.

Ordered to resume their talks after one public employee group rejected a proposed settlement, the two sides announced on Friday afternoon that they had reached an impasse.

Each seemed to blame the other for the breakdown.

“Due to a small group of union members the settlement agreement has failed and the mediation process has ended,” Governor Chafee and General Treasurer Gina Raimondo said in a joint statement. “We find this disappointing and frustrating.”

Ray Sullivan, spokesman for the employee and retiree groups that challenged the pension overhaul, said the plaintiffs “abided by the judge’s order to explore a path to a new settlement agreement, but the state decided it would rather pursue costly and drawn out litigation.”

“We are now prepared to take the necessary steps in proceeding to trial,” Sullivan said.

Superior Court Judge Sarah Taft-Carter ordered the two sides to mediation last year, and in February, after a year of closed-door talks, the two sides announced a proposed settlement — one Raimondo said would preserve 95 percent of the savings expected from the lawmaker-approved pension overhaul.

Five of the six public employee groups involved, including teachers, state employees and firefighters, voted to approve the deal. But the smallest group, local police officers, rejected it, with more than 250 of 417 officers who were eligible to vote saying no.

On Monday, that led Taft-Carter to order the two sides to resume talks, with the understanding that they would report back to her next Monday.

Then came Friday’s announcement.

Asked why the talks ended, Chafee’s office would not comment beyond the official statement issued with Raimondo, while Raimondo’s office said only that the two sides could not “reach consensus on a way forward.”

“Both sides mediated in good faith and no reasonable solution was available,” said Raimondo spokeswoman Joy Fox.

Sullivan, meanwhile, said the state made the decision, informing “the plaintiffs” on Friday “that mediation would not continue.”

It was not clear Friday whether Taft-Carter’s gag order, which bars the parties from talking about the mediation process, was still in place. Fox and Sullivan said it is their understanding that the order remains in place, and courts spokesman Craig Berke said “there is no plan for a formal retraction of the order.” But Berke also noted that the final paragraph of the order says it remains “in effect until such time as the mediation is suspended or terminated.”

“I will not interpret what it means,” he said.

The Raimondo-led 2011 overhaul raised retirement ages, cut benefits and suspended the annual payment of “cost of living adjustments,” or COLAs, to save a projected $4 billion over two decades and more than $274 million alone during the budget year it took effect.

Labor unions sued, saying they had a contractual right to promised benefits that were substantially reduced.

The proposed settlement, announced Feb. 14, tweaked the retirement age for newer employees, increased the defined-benefit pensions available to longtime employees and provided the opportunity for more frequent pension increases, as well as an immediate bump worth up to $500.

There were also concessions that applied to local police officers. Before the 2011 overhaul, they could retire at any age after 20 or 25 years, with the number varying by community. After the 2011 overhaul, the minimum retirement age was 55, after a minimum of 25 years.

Under the proposed settlement, officers employed as of June 30, 2012, would have been allowed to retire with a full benefit at age 50, after 25 years of work, if they contributed an additional 2 percent of their pay, raising their overall contribution to 9 percent or 10 percent, depending on whether they work in a community that provides COLAs. Alternatively, they could retire at age 57, after 30 years of work, and receive a slightly larger benefit.

Both sides expressed confidence that they will prevail in court.

Sullivan said “the plaintiffs continue to believe in the fundamental strength of our legal arguments,” while Fox said the state “has strong legal arguments to support its positions and will begin to prepare for litigation.”

A trial date is set for Sept. 15.

(c)2014 The Providence Journal

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