Lawsuit Against 2010 Pension Legislation Soundly Dismissed

Lawsuit Against 2010 Pension Legislation Soundly Dismissed
http://mnfmi.org/2011/06/30/lawsuit-against-2010-pension-legislation-soundly-dismissed/
June 30th, 2011 by Kim Crockett
Two former public employees filed a class-action lawsuit against the state challenging pension reform legislation that state lawmakers passed at the end of the 2010 legislative session. The legislation was intended to shore up the pension funds by reducing future increases paid out to retirees until the funds recover from deep unfunded liabilities. The case known as Swanson V. PERA was dismissed by the Ramsey County District Court yesterday on June 29, 2011.

The 26-page order can be viewed (PDF) here.

Judge Gregg Johnson wrote that the “sole issue before the court is whether the Legislature has the authority to amend a statutory formula that is used to calculate the availability and amount of future adjustments to public retirees’ pension annuities.” The court denied plaintiffs’ motion for summary judgement, while granting the defendants’ (the state pension funds) motion for summary judgment and dismissed all of plaintiffs’ claims with prejudice. (The court did not take up the issue of a class action.)

The court backed up the Legislature’s policymaking authority, stating, “statutes are not contracts absent plain and unambiguous terms that show an intent to contract. To decide otherwise risks a serious intrusion into the Legislature’s policymaking authority. The relevant statutory language does not encompass a legislative contract or promise to refrain from amending the statutory formula, for those public employees who have retired.”

While the 2010 Omnibus pension bill did not fundamentally reform pensions in Minnesota, it pulled the funds back from a precipice. It was a responsible move. This decision, which may be appealed, is good news for the state pension funds. And good news for taxpayers because this means pensions can be changed.

You can read more about the 2010 Omnibus Pension Bill and other pension related topics here. You can read a summary of the 2010 Omnibus Pension Bill prepared by the Legislative Commission on Pensions and Retirement here.