According to news reports, retirees had argued that their benefits were contractual in nature, and therefore protected by state and federal constitutional language barring the impairment of contracts. However, Judge Gregg E. Johnson of the state’s Second Judicial District Court wrote that the retirees in that state “have not met their burden to show unconstitutionality beyond a reasonable doubt,” the New York Times reports.
Johnson said the state’s interest in improving the pension plans’ financial health trumped the retirees’ claim that their cost-of-living adjustments can’t be reduced. “The legislature appropriately and responsibly took a multitude of steps not in the state’s self interest but in the collective interest of all members,” Judge Johnson wrote, according to the Wall Street Journal.
Assistant Attorney General Rita Coyle Demeules, arguing the cuts should be upheld, told the judge at the hearing that pension terms for active employees were also altered to spread the burden. “The benefits they cite are future and speculative,” she said, according to Bloomberg.
The case is Swanson v. State of Minnesota, 10-05285, Ramsey County, Minnesota, District Court, Second Judicial District (St. Paul).
A Denver district judge also has thrown out a lawsuit challenging legislation that lowers cost-of-living increases for members of the Colorado Public Employees’ Retirement Association (see Court Supports Lowering COLAs for COPERA Members).
The news reports said other states have been awaiting the outcome of the cases before making similar cuts.