Pivotal pension ruling in unions' favor

PROVIDENCE, R.I. (WPRI) - RI Gov. Lincoln Chafee and Treasurer Gina Raimondo will be challenging a Superior Court judge's ruling on pension rights in RI Supreme Court, according to the state's lawyer John Tarantino.

In a joint statement to Eyewitness News, Chafee and Raimondi said in part, "Today’s lower court ruling recognized this is only the beginning of what could be a long legal process. We understand that this case will ultimately be decided by the Rhode Island Supreme Court. The state will be seeking immediate Supreme Court review of Judge Taft-Carter’s decision."

Earlier on Tuesday, the judge ruled that state workers have a contractual right to their pensions, in a decision that could greatly affect how the state is able to move forward with sweeping pension reform.

The House and Senate finance committees are scheduled to begin joint pension hearings Wednesday and the full chambers are set to return after Columbus Day.

• PDF: Judge Sarah Taft-Carter's decision
• Nesi's Notes: Pension ruling analysis

"In her analysis and decision, the judge found that there is an implied contractual relationship between the Employees Retirement System of Rhode Island and participating employees," judicial spokesman Craig Berke said in a news release. "That was the only issue the Court was asked to decide in this particular case."

The ruling by Superior Court Associate Justice Sarah Taft-Carter stems from a lawsuit challenging benefit reductions in 2009 and 2010, under former Gov. Donald Carcieri's administration.

The state maintained it had the authority to make the changes to pension benefits unilaterally - including increasing the years of service to qualify for retirements, reducing pensions and limiting cost-of-living adjustments, or COLAs. However, the union maintained the changes were a breach of contract.

Judge Carter-Taft agreed, ruling courts "recognize that the promise of a pension is part of the compensation package that employers dangle to attract and retain qualified employees."

House Speaker Gordon D. Fox and Senate President M. Teresa Paiva Weed issued a joint statement which read in part, “The court’s decision to deny summary judgment has no effect on the pension reform discussions scheduled to take place before the joint House and Senate Finance Committees over the next three weeks. Around the time of the conclusion of those hearings we anticipate receiving a proposal from the General Treasurer’s Office and the Governor that will be vetted by the full General Assembly in October."

Several local union leaders applauded the judge's decision.

“Council 94 and other state employee/teacher unions have argued all along that pensions are not simply gratuities. We have to work long and hard to earn a pension," said J. Michael Downey, president of Rhode Island Council 94 of the American Federation of State, County, and Municipal Employees. "The state should not simply be able to take away or make changes to our pensions whenever they want. The state’s motion for summary judgment attempted to have our case thrown out of court before a trial was even held."

"We're very pleased that Judge Taft-Carter saw there was indeed an implied contract with teachers and state employees regarding their retirement security," said Robert Walsh, executive director of the National Education Association Rhode Island teachers union.

Walsh called for the General Assembly to postpone its pension session. ”I think the state needs to take a step back,” he said. “It would not be prudent to make further changes to the pension system without knowing whether the changes they make are legal. And there is time: the next round wouldn’t be in effect until July 1 of next year.”

Walsh is also a member of the pension advisory group appointed by Gov. Lincoln Chafee and Raimondo. The panel, which met for the final time Monday, was charged with tackling the state's massive $7 billion unfunded pension liability.

Raimondo has led the reform charge, saying major reform is needed to avert disaster.