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RI court hears arguments in pension case

Published on NewsOK Modified: December 7, 2012 at 1:19 pm •  Published: December 7, 2012

PROVIDENCE, R.I. (AP) — With billions of dollars and the retirement security of public workers at stake, the legal dispute over Rhode Island's sweeping overhaul of its public pension system heated up Friday as the state asked a judge to dismiss the challenges filed by public-sector unions and retirees.

Attorney John Tarantino, the state's lead attorney, told Superior Court Judge Sarah Taft-Carter that the unions failed to make their case that lawmakers violated workers' contracts when they passed legislation to suspend pension increases and alter retirement benefits. He said benefits set through state law don't amount to a contract.

But lawyers for the unions and retired government workers insisted that retirement benefit agreements do constitute a contract, and that their challenge should be allowed to continue.

Taft-Carter did not say when she would rule on the motion — which could be only an early skirmish in what's expected to a protracted and complicated legal fight.

The outcome of the case could have far-reaching implications as states around the country wrestle with nearly $1.4 trillion in unfunded pension promises. Rhode Island, which had struggled with one of the most underfunded systems in the nation, drew national attention when lawmakers voted last year to suspend pension increases, raise retirement ages and merge pensions with 401(k)-style accounts to reduce its pension bills by an estimated $4 billion over the next two decades.

Without the changes, state leaders warned that pension costs would have consumed more and more public dollars, reducing funds for education and other programs and ultimately hurting the very workers served by the pension system. Before the law was passed, Rhode Island's pension costs were set to rise from $319 million in 2011 to $765 million in 2015 and $1.3 billion in 2028.

Tarantino said the unions' challenge to the law should be thrown out because they haven't shown that lawmakers intend to create a contract when they vote on pension benefits.

"The role of a legislature, its function, is not generally to make contracts. They make policy. They make law," he said. "... We don't want the judicial system, as good as it is ... to basically second-guess what the legislature is doing."

But attorney Carly Iafrate, arguing for retired workers, said teachers and government workers are entitled to the same employment and contract rights as any other worker — even if their benefit agreements are set by legislators.

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