PROVIDENCE, R.I. (WPRI) – One of Rhode Island’s most influential labor leaders is making a forceful case to his current and former members that they should accept a proposed settlement and end their lawsuit against the state’s 2011 pension overhaul.
Robert Walsh, executive director of the National Education Association Rhode Island teachers’ union, sent a private email Monday to the union’s mailing list laying out why his organization supports the settlement and answering some frequently asked questions about it.
“I would vote for the settlement agreement,” he wrote. “While it would certainly be politically easier to let a judge, jury or the Supreme Court to take the blame for a worse outcome, it would be negligent not to recommend settlement based on everything that I have learned.”
At stake in the suit is whether Rhode Island legislators acted constitutionally three years ago when they reduced future retirement benefits to shave roughly $4 billion off the shortfall in the state’s pension fund for government workers and taxpayers. Retirees voted overwhelmingly in favor of settling on Monday.
Walsh, like everyone else involved in the lawsuit, has been barred from speaking about the settlement due to a judicial gag order. But the email obtained by WPRI.com offered a clear breakdown of his views on the fast-moving pension situation.
- PDF: Read Robert Walsh’s email about the pension settlement
- Also Today: RI retirees OK pension settlement overwhelmingly
- Last Week: RI, unions reach new deal to settle pension suit
In the email, Walsh said the balance of factors impacting the union’s arguments have changed for the worse since a previous proposed settlement was rejected nearly a year ago.
“Frankly, [things] are not better,” he wrote in the email. “Several things have happened – one good, many not-so-good.”
The good, in Walsh’s view, is that R.I. Superior Court Judge Sarah Taft-Carter has repeatedly found that workers and retirees have an “implied” contractual right to their promised benefits, even though the details were spelled out in statute rather than a traditional contract. However, he noted that courts can allow contracts to be broken if a compelling case is made about the need to do so.
The bad, Walsh continued, is that the judge has granted a jury trial in the case. “Some people think that a Rhode Island jury might not be particularly sympathetic to those opposing the realigning the pension benefits for state, teacher and municipal workers,” he wrote.
And the “ugly,” in Walsh’s analysis, is Taft-Carter’s decision just last week that the union side has the burden of proof to prove – beyond a reasonable doubt – that the state could have found more reasonable ways to change the pension system.
“Since the rate of return and actuarial changes will in all likelihood easily pass the reasonableness standard, the fight would likely center around two ways to pay for member improvements – re-amortizing the plan (which the media has already reported is the likely mechanism for covering the costs of the current settlement proposal) or tax increases,” he continued.
Walsh indicated the unions still aren’t sure how the governor and other state officials will respond if one or more groups reject the settlement this time; when that happened last year, the state refused to settle with any of the groups, and the two sides are currently preparing for a trial to start April 20.
“It is unknown how the state will react if the same thing happens this time,” Walsh wrote.
Even winning the case would not restore the original pension system, Walsh argued, but rather “would most likely give relief along the lines of the settlement agreement, assuming things in Rhode Island and/or with the pension system or financial markets are not worse off after all appeals are done.”
And he made a case that union members and retirees should take whatever steps are necessary to avoid a final judicial decision that upholds state lawmakers’ power to cut pension benefits. All sides expect the jury’s decision would get appealed to the R.I. Supreme Court.
Reaching a settlement “at this point means there is no contrary court ruling in place,” Walsh wrote. “So, if changes occur again, we could still sue with no court decision to prevent it.”
The proposed settlement would lock in much of the savings the state got from the 2011 law but would make a number of changes union leaders say will soften the blow, such as in the calculation of retirement ages and cost-of-living adjustments (COLAs).
The deadline for active workers to finish voting on the settlement proposal is this Friday.
With no final settlement in place yet, the pension case continues moving forward toward trial. Lawyers on both sides are scheduled to appear before Taft-Carter on Thursday morning in Newport County Superior Court to tackle dispositive motions.Ted Nesi (firstname.lastname@example.org) covers politics and the economy for WPRI.com and writes the Nesi’s Notes blog. Follow him on Twitter: @tednesi