WA Teachers Challenge "Gain-Sharing" Law Repeal

May 16, 2007 (PLANSPONSOR.com) - Teachers in Washington state filed suit against the state, claiming that legislative action revoking a 1998 "gain-sharing" law is unconstitutional and will cost them future pension losses, according to Associated Press.

The state teachers union and some individual teachers – represented by the Washington Education Association (WEA) – filed the suit in a King County Superior Court. The group alleges that the repeal of a 1998 law that decided that Washington pensioners should get a share of the earnings when the state’s investments perform well will cost pensioners billions in future pensions.

However, lawmakers argue that the state will save an estimated $100 million in the next two years and $6.7 billion over the next 25 years by nullifying the “gain-sharing” law. The final payout from these investments is set to happen next January.

The WEA claims that repealing the law is unconstitutional because it “impairs a vested contractual right.” The association is also seeking to block a provision of the measure – a “poison pill” – that would repeal new retirement benefits if a lawsuit challenging the repeal is successful, the AP reported.

The pensioners will not walk away from the deal empty handed. Some pensioners will receive cost-of-living increases, and many will qualify for early retirement, with no penalties, which all in all will cost the state about $4.4 billion over the next 25 years.