UPDATE 2-Rhode Island pension reform faces court challenge | Reuters

(Reuters) – A new lawsuit challenging last year’s sweeping reform of Rhode Island’s public pensions will continue, even though labor unions were unable on Friday to stop the changes from taking effect on July 1.

Rhode Island superior court Judge Sarah Taft-Carter denied the request for a temporary restraining order, a spokesman said, just hours after unions launched three coordinated lawsuits on behalf of at least 30,000 state employees, retirees and emergency responders.

The unions claim that state officials violated employment contracts and did not first try less severe measures before passing the Rhode Island Retirement Security Act, according to Robert Walsh, executive director of the National Education Association’s Rhode Island chapter.

Most U.S. states have begun some kind of reform for their public pension systems in the face of massive unfunded liabilities and depressed post-recession revenue collections.

Rhode Island’s reform has been among the most far-reaching, with experts around the country watching how it progresses.

Rhode Island’s public pensions were among the worst funded – 49 percent – of all states in fiscal year 2010, according to a recent study by the Pew Center on the States. The state’s unfunded pension liability stood at about $7 billion in 2010.

The reforms, spearheaded by state treasurer Gina Raimondo, suspended cost-of-living adjustments, raised the retirement age, lowered the assumed rate of return on pension funds to 7.5 percent from 8.25 percent and moved state employees onto a hybrid pension benefit plan, among other changes.

Unions said they would sue, but the litigation has been a long time coming. The state legislature passed the law in November.

State officials could have tried “more reasonable alternatives” first, Walsh said, including tax hikes, raising the expected rate of return on the pension funds, and tweaks to mortality tables and the retirement age.

Raimondo said in a statement that the reform “represented the culmination of 11 months of thoughtful, fact-based analysis and input from retirees, employees and taxpayers.”

“It was carefully designed by the in an effort to save our state-administered retirement system,” she said, adding that her office “would work diligently to defend” the law.

Raimondo and Governor Lincoln Chafee, who supported the legislation, were among those named in the litigation.

The unions could challenge the judge’s order, but Walsh said they had not yet decided whether to appeal. A court hearing is scheduled for July 16 as the case moves ahead.

Rhode Island’s pension problem is bigger than just the state system, however.

It also has dozens of local pension plans that are administered separately by towns and cities. Many are in even worse shape than the state’s funds. Last year’s reform and Friday’s lawsuits don’t apply to the local funds.

The local pensions are funded at 40.3 percent with about a $2.1 billion collective unfunded liability at the end of fiscal year 2010, according to a state auditor general’s report.

Some Rhode Island cities — including the capital, Providence — have embarked on reform of their own.

Providence public employees and retirees still must decide whether to accept a compromise that would stave off lawsuits over the latest reform, as well as settle suits over an older change that moved retirees’ healthcare coverage to the federal Medicare program.

via UPDATE 2-Rhode Island pension reform faces court challenge | Reuters.

Dispute over School District of Lancaster’s cafeteria labor continues – News

School District of Lancaster has promised to avoid any layoffs as a result of proposed changes to its food service operations next school year.

But the union representing the affected workers has vowed it will challenge the move — which it considers outsourcing — even if no jobs are lost.

The dispute took a new turn Tuesday when SDL superintendent Pedro Rivera said no workers would lose their jobs as a result of the changes. Previously, the district had said four cafeteria workers may be furloughed.

The school board Tuesday authorized the administration to pursue the changes, which involve increasing the percentage of prepackaged meals served at district schools from about 50 percent currently to nearly 100 percent beginning next year.

The change would mean more “preplated” breakfasts and lunches and less in-house preparation of meals at district kitchens at McCaskey High School, where all food is packaged for distribution to SDL schools.

Michael Fox considers that an outsourcing of jobs performed by district cafeteria workers, who are represented by the American Federation of State, County and Municipal Employees union, in violation of the workers’ contract.

“A private entity would be hired to provide the services our members currently provide. That, by any definition, is outsourcing,” said Fox, director of AFSCME District Council 89, which represents more than 500 SDL support staff workers.

Under a contract extension negotiated last year, the workers agreed to a two-year wage freeze in exchange for a promise that no jobs would be outsourced over the course of the contract, which expires June 30, 2013.

“We made a substantial sacrifice a year ago,” Fox said. “As part of our side of the agreement, we didn’t get our raises, so we fully expect the school board and the administration to adhere to their side of the agreement.

“If they’re going to turn over our bargaining unit work to a private entity, we’re going to pursue a grievance,” he said.

Rivera said the administration doesn’t consider the move outsourcing, but admitted there’s “a real fine line” between the two opinions.

via Dispute over School District of Lancaster’s cafeteria labor continues – News.

GOP blocked from California pension reform vote – San Jose Mercury News

SACRAMENTO, Calif.—While Democrats announced a budget agreement with Gov. Jerry Brown, Republican lawmakers in Sacramento were blocked this week from bringing public pension reform for a vote.

GOP lawmakers said next week is the last chance the Legislature has to adopt a constitutional amendment in order to place a measure on the November ballot. They pushed a vote Thursday in the Senate on the governor’s proposals but were blocked by Democrats.

“The people of California deserve an iron-clad constitutional guarantee that the Legislature won’t simply unwind future reforms our state so badly needs,” Sen. Bill Emmerson, R-Hemet, said on the Senate floor.

Senate Democratic leader Darrell Steinberg said Democrats were busy with the state budget. He said the majority party plans to take up and modify Brown’s proposals for a hybrid pension system.

“We will meet the governor’s 12 principles,” Steinberg said in a briefing with reporters.

Brown has proposed an extensive pension-reform plan to raise the retirement. It includes increasing the retirement age to 67 for new, non-public safety employees and having local and state government workers pay more toward their pensions and retiree health care.

Brown’s proposal also would put new workers in a hybrid plan that includes 401(k)-style accounts.

“Examine it. Improve it. But please take up the issue and do something real. I am committed to pension reform because I believe there is a

real problem,” Brown said in his January State of the State Address.

Reform advocates are hoping to build momentum for statewide reform after voters in San Diego and San Jose overwhelmingly approved ballot measures to roll back municipal retirement benefits for current and future employees. But Democrats who control the Legislature have not acted on the governor’s proposal since he introduced it eight months ago.

The California Public Employees Retirement System, the nation’s largest public pension fund, runs a $228.5 billion pension system for more than 1.6 million state employees, school employees and local government workers. The total is down from $251.4 billion in 2007. The system has an unfunded liability of around $85 billion.

The $146.8 billion California State Teachers’ Retirement System manages a fund for more than 600,000 active and retired teachers and has about $64.5 billion in unfunded liabilities.

Lawmakers have been focused on allocating resources and closing a $15.7 billion budget gap, and that should be separated from tough policy discussions on public pension, said Fred Silva, senior fiscal adviser at California Forward, a bipartisan group of business and political leaders that is seeking solutions to the state’s fiscal and political problems.

“You’ve got to get this spending plan through, and in this case the Democrats did it because they have a majority vote,” Silva said.

Steinberg said Republicans chose not to trade pension changes in exchange for putting a tax hike measure on a statewide ballot. “Last year they blew a golden opportunity to negotiate a comprehensive agreement with the governor because of their anti-tax position,” he said.

Republicans said they were ready to make the deal, but the governor backed out because of pressure from union interests.

via GOP blocked from California pension reform vote – San Jose Mercury News.

Delay of Phoenix pension-reform vote gets mixed reaction

Several members of the Phoenix City Council were annoyed during this week’s discussion of pension reform, frustrated that the issue would not go before voters in November.

Phoenix has been talking about overhauling the city’s pension system for more than a year, with some elected officials hoping the required city-charter changes could go before voters this fall, when there will be high turnout for the presidential election.

Councilman Tom Simplot said he was frustrated that two November elections will have passed before the city enacts pension reform, which also impacts the savings Phoenix could be accrue through the changes.

Councilman Jim Waring also was disappointed, saying turnout in the November election would likely hover around 80 percent, while a March election would gather only 20 percent turnout.

But because of legal and technical issues, city staff and others on the City Council said it would be best if pension reform lands on the ballot in March instead. Phoenix officials wanted to wait and see how the state handled a lawsuit in which schoolteachers sued after Arizona legislators enacted pension-system reforms.

In February, Maricopa County Superior Court Judge Eileen Willett said a law that went into effect last July 1 requiring state employees to cover 53 percent of the contributions to the Arizona State Retirement System instead of 50 percent was unconstitutional.

The state didn’t contest the ruling and repaid public employees money they put into the system under the law, with interest. The state Constitution only allows pension changes to impact incoming, new employees.

Waring said every day Phoenix waits to enact pension reform allows new employees to come under the old system, hindering the city’s ability to save money.

But Phoenix Mayor Greg Stanton said the city should not rush reform to avoid the risk of getting sued like the state.

“The intent is to take the time to do this right,” Stanton said.

One reform proposal would have increased the retirement age in Phoenix to 63, but some were concerned about whether it would deter public employees from wanting to work for the city since surrounding governments and the state allow workers to retire at a younger age.

Phoenix has asked consultants to model more scenarios and possible reform measures to present to the City Council after elected officials return from summer break.

via Delay of Phoenix pension-reform vote gets mixed reaction.

Labor unions sue over Rhode Island pension reform | Reuters

(Reuters) – Labor unions sued the state of Rhode Island on Friday over sweeping public pension reforms passed last year, putting the July 1 implementation date at risk of delay.

The unions claim that state officials violated employment contracts and did not first try less severe measures before enacting pension reforms, according to Robert Walsh, executive director of the National Education Association’s Rhode Island chapter.

The reforms, spearheaded by state treasurer Gina Raimondo, suspended cost-of-living adjustments, raised the retirement age, lowered the assumed rate of return on pension funds to 7.5 percent from 8.25 percent and moved state employees onto a hybrid pension benefit plan, among other changes.

A spokeswoman for Raimondo did not immediately reply to a request for comment. She and Governor Lincoln Chafee, who supported the legislation, were among those named in the litigation.

Most U.S. states have begun some kind of reform for their public pension systems in the face of massive unfunded liabilities. But Rhode Island’s reform has been among the most far-reaching, experts have said.

via Labor unions sue over Rhode Island pension reform | Reuters.

Lawmakers say more closures inevitable without pension reform

SPRINGFIELD — Illinois needs to agree quickly on a pension-reform plan, or more prison closures and pending job losses are sure to come, Southern Illinois lawmakers say.

Unions are willing to make concessions, the lawmakers say, but they haven’t been given a place at the table.

“What you do with the unions is bring them in and sit them down at the table and talk to them: ‘Here’s our problem…’ and they’ll work with you. This governor has not worked with the unions yet to try to do that,” said Sen. Gary Forby, D-Benton.

“Unions are willing to sit down. They’re willing to talk. They’re willing to work something out. But instead of cutting things out before you sit down and work things out, (it’s) not the right way to do stuff.”

Brooke Anderson, spokeswoman for Gov. Pat Quinn, said the governor’s staff has been in “constant communication” with the unions about the prison closures. She did not respond when asked to comment about additional opportunities for unions to negotiate or make concessions to keep the facilities open.

“We have the responsibility to manage the state’s limited resources as efficiently as possible and make the difficult decisions necessary to restore fiscal stability in Illinois,” Anderson said. “These closures will allow the state to better live within our means and address the state’s most pressing needs.”

Quinn told lawmakers around the state Tuesday afternoon he still intends to shutter numerous correctional facilities, including three in southern Illinois, even though the Legislature included money for the facilities in the budget it approved at the end of May.

Illinois’ public pension system owes current and future retirees $83 billion more than it has in assets. Quinn and lawmakers have been looking for ways to slash the state’s budget, including facility closures, cuts to the Medicaid program, eliminating free health care for state retirees, pension reform and more.

Southern Illinois lawmakers, union leaders and elected officials said they were shocked by the governor’s plans to proceed with the prison closures, particularly in an area of the state already plagued by high unemployment.

Anderson said Quinn is not picking on any particular region of the state and noted various factors in deciding to close certain facilities, including how many people use the facilities, what facilities are nearby, and costs.

“These closures are spread geographically across the state,” she said. “The governor’s decision to close several facilities was made after careful consideration and extensive deliberation with the Department of Corrections and the Department of Juvenile Justice.”

State Rep. Brandon Phelps, D-Harrisburg, said he is concerned about what the collective-bargaining process with the state will look like in a few years, given the abrupt action.

“I believe in negotiations and the collective-bargaining process. I believe that unions should be at the table,” Phelps said. “But right now they’re not asked to come to the table. They want to make some concessions, but they’re not asked to be at the table right now. I just think that’s absolutely wrong.”

Anders Lindall is spokesman for American Federation for State, County and Municipal Employees Council 31, which represents many of the workers affected by the impending closures. He said the governor’s intent has been unclear, because he’s had the budget bill for three weeks and has not acted to sign it, veto it or amend it.

“But if he uses his amendatory veto to cut funding for safe prisons, mental health care, homes for individuals with developmental disabilities and the thousands of jobs of men and women who provide those vital services, we will work with legislators to override those vetoes,” Lindall said.

Meanwhile, legislative leaders continue to work toward an agreement on pension reform in Illinois; talks collapsed in late May as the General Assembly wrapped up its session.

Leaders during a meeting in Chicago on Thursday said they intend to use the next five weeks to study school-funding equality, apparently a result of talks over shifting pension costs from the state to local schools.

That pushes possible agreement on a reform bill to at least the end of July, even as pensions are costing Illinoisans $12.6 million a day, according to the governor.

Quinn, who has called for swift action on the matter, said he is urging leaders to come to an agreement this summer, well ahead of the November election and before the veto session begins in late November.

“I’m pushing as hard as I can (for a vote before the veto session). I’ll do it every day to alert those in the Legislature this is not something you can run in place on,” Quinn said. “This is a time for action. The leaders have to understand that waiting around for another election is really not the best prescription for pension reform.”

Back in southern Illinois, Rep. Mike Bost, R-Murphysboro, agreed the pension system is doomed to fail as things stand now, but he also questioned the governor’s credibility. Lawmakers thought they had a deal for the facilities to remain open if the funding was allocated in the budget, he said.

“I never voted to short the pension, and I’ve never been so proud of the fact that I never voted to short the pension. I spoke out against it every time we did. (But) we’ve still got to deal with that problem,” he said.

“We can come up with an agreement (on pensions) that is still fair, constitutional and is workable in the future. We’ve got to do that. But if it’s pending on the fact that a governor is going to give his word, his word is not anything unless he signs this (budget) and keeps these facilities open.”

via Lawmakers say more closures inevitable without pension reform.

Time Running Out On Ill. Pension Reform « CBS St. Louis

SPRINGFIELD, ILL. (IRN) – Legislative leaders will revisit the subject of pension reforms in five weeks.

After their latest meeting to try to come to a compromise on pension reforms, legislative leaders have decided to take five weeks to make sure schools across the state are funded equally.

It’s the latest piece to be rolled into talks on reforming teacher pensions by shifting the burden from the state to suburban and Downstate school districts. Chicago schools already pay the cost of their teachers’ pensions.

Gov. Pat Quinn says he’ll allow five weeks for legislative leaders to investigate, but reminds those lawmakers it comes at a cost. “I agreed to, over the next five weeks, to study this issue with the leaders of the legislature on school funding issues and the impact it would have on school districts…but we ultimately have to come to moving the ball forward,” Quinn said. “We have to get fundamental, comprehensive pension reform that deals with an $83 billion liability right now that’s growing …by $12.6 million a day, every day.”

House Speaker Mike Madigan (D-Chicago) believes this is a stall tactic. “When you don’t want to deal with the free lunch for the local school districts, you talk about school funding,” Madigan says. Asked if he though some legislative leaders were trying to divert the issue, Madigan said “yes, you just talked to them,” referring to the Republican leaders. The Republican move is likely a tactic to force Democrats to drop the cost shifting plan from a pension reform bill, Madigan said.

The five-week reprieve means that pension reforms will not be in place come the start of the new fiscal year July 1. Credit rating agencies have been watching the state’s moves when it comes to pension reforms and have said the state’s ratings could be downgraded if reforms aren’t enacted. Quinn hopes the recently enacted reforms in Medicaid and state retiree health care will stave off any downgrades.

via Time Running Out On Ill. Pension Reform « CBS St. Louis.

Democrats kill pension reform bills | CalWatchDog

Antics today in the California Senate hit an all time low when Democrats blocked attempts to bring public pension reform bills SB 1176 and Senate Constitutional Amendment 18 to the Senate Floor for a vote in order to make the November ballot deadline.

Senate Republicans had adopted Gov. Jerry Brown’s 12-point pension reform plan, and placed the language in the two bills. Still Senate Democrats killed chances for much needed reform for the state, as well as for public employees.  read more…

via Democrats kill pension reform bills | CalWatchDog.

Committee agrees to compromise on pension reform | The Greenville News | GreenvilleOnline.com

COLUMBIA, S.C. (AP) — A conference committee has agreed to a compromise on reforming South Carolina’s pension systems for public workers.

The six-member committee unanimously approved an agreement Thursday morning but did not discuss it publicly. Legislators refused to detail afterward what’s in the compromise.

It was the conference committee’s first public meeting in two weeks.

Committee leaders aren’t providing a breakdown until they report to their colleagues in the House and Senate.

But Democratic Rep. Gilda Cobb-Hunter says the agreement accomplishes the goal of shoring up the pension systems to ensure that workers get their benefit checks decades from now, and she’s proud of the end result.

Both the House and Senate versions exempted current employees from most of the changes. Changes in benefit calculations begin with employees hired after July 1.

via Committee agrees to compromise on pension reform | The Greenville News | GreenvilleOnline.com.

Huff’s Attempt to Get Vote on Pension Reform Fails – Walnut, CA Patch

After attempts to get two pieces of legislation related to pension reform through the committee process failed, Sen. Bob Huff decided Thursday to take the bills directly to the Senate floor.

Frustrated that the bills were bogged down in the committee process, the Republican Senate Leader, R-Diamond Bar, called on all of his colleagues to vote on his proposed legislation.  The Senate opted not to vote on the pension reform measures or debate the issue, something Huff said is an effort on the Democrats’ part to shut out Republicans.

“You had an opportunity to bring the Governor’s public pension reform plan to the Senate Floor, to debate it in the open and you said no,” Huff said in a statement. “You don’t want to have a debate in public. You want to work on a secret plan behind closed doors, away from public view.”

Senate President Pro Tem Darrell Steinberg, D-Sacramento, told the Sacramento Bee last month that pension reform is still very much on the table, although the time frame for when negotiations would be done and a comprehensive package completed is unknown at this time.

This is not the first time Huff has voiced disappointment that pension reform is not moving at the pace he would like.

In April, he lamented the failure of two proposed pension reform bills, one on the Senate side and another considered by the Assembly, to gain any traction with state lawmakers.

In February, Huff and several other lawmakers held a press conference announcing support for Gov. Jerry Brown’s pension reform plan.

Huff had authored Senate Constitutional Amendment 18 and Senate Bill 1176, which complemented similar measures proposed on the Assembly side.

The governor’s plan calls for public employees to contribute more to their pension, raises the retirement age, and reduces benefits for new hires, among other changes.

“It’s time to fix our pension systems so that they are fair and sustainable over a long time horizon,” Brown said in October. “My plan raises the retirement age and bans abusive practices like ‘spiking’ and ‘air time’ while mandating that public employees pay an equal share of pension costs.”

via Huff’s Attempt to Get Vote on Pension Reform Fails – Walnut, CA Patch.