Judge grants injunction stopping GABA reduction in TRS

12-28-13

 

Good news!

 

Late in the afternoon of Dec. 27, Judge Mike Menahan granted MEA-MFT's request for a preliminary injunction that prevents the state from implementing a serious GABA reduction come January 1 in the Teachers Retirement System. Read the court order here.

 

In effect, Judge Menahan came to the same conclusion as did Judge Jim Reynolds who handed down a similar injunction a week ago re: GABA reductions in the Public Employees Retirement System. 

 

Now, we wait for court dates to hear the merits of our objections to the legislature’s unnecessary and unconstitutional attempts to divest the vast majority of current and future public employee and teacher retirees of a portion of the guaranteed annual benefit adjustments this state has promised they would receive.

 

Saving and amortizing our public employee and teacher retirement systems has been a long struggle . . . and it is not yet over . . . but right now, I like our odds.

 

Our union at work!!!! [News article follows.]

 

Eric Feaver

 

Court blocks COLA cuts for retired teachers 

BY CHARLES S. JOHNSON OF THE STANDARD STATE BUREAU – MONTANA STANDARD –

 

DECEMBER 28, 2013

 

HELENA — A Helena district judge on Friday halted, for now, a reduction set to take place Wednesday in the annual cost-of-living raises paid to thousands of retired Montana educators.

 

District Judge Mike Menahan late Friday granted a preliminary injunction to block the state Teachers’ Retirement System from reducing the annual cost-of-living raises for retired teachers from the current 1.5 percent rate to 0.5 percent on Jan. 1.

 

He ruled in favor of the MEA-MFT union and six current and retired educators who filed the lawsuit in October. A later trial before Menahan will consider the merits of the case.

 

As a result, the annual cost-of-living increase will remain at 1.5 percent for now.

 

As of July 1, TRS had nearly 14,000 retired members and beneficiaries and more than 18,000 active full-time and part-time members. TRS members are eligible to receive cost-of-living raises 36 months after they have begun receiving their monthly pensions.

 

In Montana pensions, the annual cost-of-living increase is known as Guaranteed Annual Benefit Adjustment, or GABA.

 

“I’m very pleased,” Eric Feaver, president of the MEA-MFT, said. “We felt we had the facts and the law on our side. We are now looking forward to going to court and debating the merits of the issue. We don’t think the state can reduce the GABA.”

 

The MEA-MFT and individuals were challenging the reduction in the GABA rate passed by the 2013 Legislature as part of an effort to shore up the finances of the state Teachers’ Retirement System. The system’s investments lost about one-fourth of their value during the 2008-2009 national recession.

 

Besides the GABA reduction, the law provided for a one-time $14.7 million contribution from school districts and an annual $25 million annual appropriation from the state to the Teachers’ Retirement System. The lawsuit challenged only the GABA reduction.

 

“On the facts presented here, plaintiffs have established a prima facie case that TRS pension benefits are contractual and that a reduction in the GABA constitutes a substantial impairment to plaintiffs’ contracts resulting in an irreparable injury,” Menahan wrote.

 

He said both the MEA-MFT and other plaintiffs and the state agreed that the 2013 law achieved its stated goal and the TRS is actuarially sound, without a reduction to the GABA.

 

As a result, Menahan said, “it is arguable whether the reduction in GABA was either reasonable or necessary to achieve its stated purpose.”

 

The judge said he would not at this time address the state’s claim that state law gives the Legislature the power to revise a retirement contract by law. Menahan said he would decide that issue after a trial.

 

Menahan’s decision follows a similar one issued a week ago by District Judge James Reynolds of Helena regarding the same issue with a different state pension system.

 

Reynolds issued a preliminary injunction sought by the Association of Montana Retired Public Employees and some individual retirees to stop, for now, a cut in the GABA for thousands of retired state and local government employees under the separate state Public Employees’ Retirement System.

 

Under a separate law passed earlier this year, the GABAs for retirees under PERS were set to drop from 3 percent to 1.5 percent on Jan. 1. However, because a financial trigger in the law also was hit, the GABA was set to drop further, to 1 percent, on Jan. 1.

 

Reynolds’ preliminary injunction stopped the cuts and kept the GABA at 3 percent for now.

 

Besides the MEA-MFT, the other plaintiffs are: Judy Byrne of Great Falls, Janet Kransky of Billings, Susan Nardinger of Joliet, Hazel Johnson of Helena, Lori Bremer of Red Lodge and Charlene Suckow of Great Falls. All are retired, except for Bremer.
 

 

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