The Washington State legislature had the right to eliminate state employee pension increases that were approved during the stock market boom of the 1990s, the Washington Supreme Court ruled unanimously Aug. 14.
In twin rulings, the Evergreen State’s high court found lawmakers were within their rights in 2007 when they repealed a gain-sharing benefit enacted in 1998 that gave certain public employee retirees a share of extraordinary investment gains whenever the pension trust funds had average investment gains of more than 10% over the prior four years — and in 2011 when they repealed automatic cost-of-living adjustments for certain retirees.
The cost-of-living adjustment at issue was approved in 1995. It provided for 3% annual increases in retirees' monthly retirement payments.
When the state 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. Reversing two lower court rulings, the court found that in both cases, the legislature had reserved the right to eliminate the benefits in the future.
"The gain-sharing statute explicitly stated that gain sharing may be repealed in the future," Chief Justice Barbara Madsen wrote for the court.
The decisions are Washington Education Ass'n v. Department of Retirement Systems, No. 88546-0 (on the COLA) and No. 87424-7 (on gainsharing).
