The Washington Supreme Court ruled unanimously for the State in two important pension cases.
The cases dealt with two pension enhancements enacted by the Legislature in the mid-1990’s (“gain-sharing” and “UCOLA,” detailed below). In enacting both, the Legislature said that the enhancements could be terminated at any time. When the Legislature terminated both enhancements due to fiscal constraints and the Great Recession, state employee unions and public employees sued, claiming a permanent right to receive these enhancements under Washington case law.
The trial courts in both cases agreed with the employees. Those decisions were projected to cost Washington taxpayers more than $10 billion over the next 25 years.
The Attorney General’s Office, on behalf of the State, appealed to the Washington Supreme Court, which today agreed with the AGO and reversed the trial courts.
Attorney General Bob Ferguson offered the following statement:
“I am proud of the work our office did to secure these victories and save taxpayers billions of dollars.
“These were difficult cases that had gone on for years, and the trial courts in both cases had ruled against the State.
“Through the hard work of our excellent team, we were able to demonstrate to the Supreme Court that those rulings were incorrect.
“Public employees work hard and deserve the pension benefits they have earned. Today’s decisions preserve the rights of public employees to receive the basic pension benefits the Legislature has promised, but make clear that the Legislature has the flexibility to add temporary benefits without being locked into providing them forever.”
These cases were handled by a team of attorneys and support staff, including Solicitor General Noah Purcell (who argued the gain-sharing case), Senior Counsel Anne Hall, Assistant Attorney General Sarah Blocki, retired Assistant Attorney General Spencer W. Daniels, Deputy Solicitor General Rebecca Glasgow, Special Assistant Attorneys General Timothy G. Leyh (who argued the UCOLA case) and Randall Thomsen, legal secretary Mary Ford and paralegal Melissa Carhuff.
Background on the cases:
Washington Education Ass’n, et al. v. Washington Dep’t of Retirement Systems (Gain-sharing)
The Legislature enacted gain-sharing in 1998. Gain-sharing gave certain public employee retirees (members of Plans 1 and 3) a share of extraordinary investment gains whenever the pension trust funds had average investment gains of more than 10 percent over the prior four years.
When enacting gain-sharing, the Legislature made clear that it “reserves the right to amend or repeal this chapter in the future and no member or beneficiary has a contractual right to receive” this pension provision not granted prior to the time of the repeal. (Former RCW 41.31.030 and former RCW 41.31A.020)
The Legislature repealed gain-sharing in 2007, after paying gain-sharing benefits already earned.
Washington Education Ass’n, et al. v. Washington Dep’t of Retirement Systems (UCOLA)
The Legislature enacted Uniform Cost of Living Adjustments (UCOLA) in 1995 for members of PERS Plan 1 and TRS Plan 1. The UCOLA provided annual increases in retirees’ monthly retirement payments.
When the Legislature enacted the UCOLA, it provided that, “The legislature reserves the right to amend or repeal this section in the future and no member or beneficiary has a contractual right to receive this postretirement adjustment not granted prior to that time.” (Former RCW 41.32.489(6), former RCW 41.40.197(5))
The Legislature repealed the UCOLA statute in 2011, cancelling future UCOLA increases. Plan 1 members kept all adjustments previously provided.
