Council 2 files two lawsuits

Council 2 has filed two lawsuits, supported another, and is pushing legislation in Olympia, all to reform the way the State operates its retirement system.

The three lawsuits challenge State decisions to deny cost of living increases to retirees and to overcharge employees who must contribute to the retirement system.

According to Pat Thompson, Council 2’s Legislation/Politica1 Action Director, “When investment funds earn larger returns than necessary to pay future pensions, as in Washington, retirees and employees should benefit.

Read these related reports: What the lawsuits are all about: Legislation/Political Action Director Pat Thompson explains what the purpose behind the lawsuits is. We're working to improve your pension: Council 2 President and Executive Director Chris Dugovich explains what the union is doing to boost your benefits.

That money can be used to improve the retirement plan, reduce the amount employees have to pay, and to protect retirees from inflation.”

Details:

The first lawsuit, filed in January 1998, alleges the State miscalculated the amounts required to be paid by employees to fund the PERS II retirement plan. This is the retirement plan for public employees who started work after 1977. There are about 5,000 retirees under PERS II, while about 155,000 members are vested, but not yet retired.

As a result of the miscalculations, Council 2 claims employees have paid more than necessary, and should be reimbursed for those overpayments. The suit alleges these miscalculations are a breach of contract and a breach of the State’s fiduciary responsibilities.

Council 2 and the other plaintiffs are asking that the court declare PERS II to be a trust, and if the State won't operate the retirement system in the best interest of employees and retirees, appoint an independent trustee and actuary to take over.
In a preliminary ruling, signed April 14, 1999, Judge Richard D. Hicks denied the State's request to dismiss the request for an independent trustee and actuary. Rejecting the State's argument that the separation of powers doctrine deprived the court of such power, Judge Hicks said, “The court has authority to issue affirmative injunctions to State officers to obey the law or carry out court orders.”

This authority included, according to the judge, “the authority to impose some form of management over PERS Plan II only in the most extreme situation such as repeated refusals of State officers to obey the Law or carry out court orders.” The plaintiffs are reviewing State documents to prepare for the trial, which is scheduled for June, 2000.

The second lawsuit, filed in November, 1998, makes similar claims as to PERS I, the retirement plan for employees working before 1977. PERS I has about 52,000 retirees and beneficiaries, while about 33,000 members are vested but not yet retired. The trial of this case is scheduled for October, 2000.

The third lawsuit was filed by the Retired Public Employees Council of Washington on behalf of PERS I retirees. It claims that the State did not pay mandatory Cost of Living increases for 14 years — between 1981 and 1995 — to an estimated 20,000 PERS I retirees. Trial is set to begin July 31, 2000.

Although not a party to this lawsuit, Council 2 supports it and is providing assistance to the Retired Public Employees Council.

The suit, filed in Thurston County on Oct. 20, 1998, seeks compensation for the state's failure to pay the adjustments, which were up to 3 percent of the pensions.

The increases, or COLAS, were authorized in legislation passed in 1973 and were paid each year from 1974 to 1980, according to the suit. The legislation, Section 195, required the Public Employees Retirement System board to pay the COLAS if the cost of living went up and if the retirement system was healthy enough to pay it.

But apparently the Department of Retirement Systems, which took over decision making from the PERS board in the late 1970s, decided the COLAS no longer would be granted, says Olympia attorney Don Clocksin, who represents the Retired Public Employees Council and Council 2 in the suit. No COLAS were paid from 1981 to 1995.

In 1995 the Section 195 COLA was repealed and the “Uniform COLA” was enacted, providing regular cost-of-living adjustments to PERS I retirees.

Some of the PERS I retirees received other COLAS from 1974 to 1980, but Clocksin estimates that as many as 20,000 did not receive any COLAS.