June 24, 2015
Two weeks after a judge gave final approval to a settlement agreement that would end several years of litigation and mediation over a 2011 public pension reform law, the Rhode Island General Assembly on June 23rd took the next required step by approving the settlement as part of the State’s $8.7 billion budget.
The Rhode Island Superior Court judge in charge of the case said the settlement was not perfect, but was “fair, reasonable and adequate.” As noted in a previous blog post on the proposed settlement, the agreement will retain approximately 90% of the savings of the original law. Judge Sarah Taft-Carter had held a five-day fairness hearing in late May to allow objectors to the settlement to present their concerns before making her decision.
Rhode Island Governor Gina Raimondo is expected to sign the budget into law and the terms of the settlement will go into effect July 1, 2015. The settlement provisions will not impact the three groups of employees and retirees who did not join the settlement: municipal police officers enrolled in the state-run pension system and the police and fire unions in Cranston, RI. Their cases will go to trial, which has been docketed for July 29, 2015. However, language included in the state budget bill would allow the groups that rejected the deal, which include about 800 people, to join the settlement.
Unlike the negotiated settlement in Rhode Island, Illinois’ pension reforms were ruled unconstitutional last month by the Illinois State Supreme Court. Alternative measures to deal with the State’s $104.6 billion unfunded liabilities have yet to emerge as the Governor and General Assembly have yet to agree upon a balanced budget for fiscal year 2016, which begins in seven days.