ALEC's plans for state and local workers -- reduce ACCRUED pension benefits to private-sector levels

[highplainsdem]

I ran across this while looking for more information on Bob Williams, after posting a topic this morning about an astroturf group he's president of.

http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=439x851457

The information about ALEC's plans to slash retirement benefits already owed to state and local employees came from an article at Stateline.org.

http://www.stateline.org/live/printable/story?contentId=540089

It was published three months ago, when the model legislation still hadn't received final approval. But that model legislation -- "A Resolution to Align Pay and Benefits of Public Sector Workers with Private Sector Workers" -- is now listed on ALEC's website with its other model legislation

http://www.alec.org/AM/Template.cfm?Section=Tax_and_Fiscal_Policy

so it has been approved.

From Stateline:

Friday, January 07, 2011
Activists seek new tactics to break old pension deals
By Melissa Maynard, Stateline Staff Writer

-snip-

ALEC, which has become a formidable purveyor of conservative legislation in the states, has developed a model resolution that seeks to take advantage of what some scholars see as a significant legal opportunity offered by interpretations of the contracts clause of the U.S. Constitution. Model language in ALEC’s proposal, titled “A resolution to align pay and benefits of public sector workers with private sector workers,” says “the U.S. Supreme Court has ruled it permissible for states to modify contractual obligations for a significant and legitimate public purpose, such as the remedying of a broad and general social or economic problem.”

A draft of the ALEC resolution, which still has to undergo final approval by ALEC’s board, declares that accrued retirement benefit obligations to all state and local workers “shall be immediately adjusted to a level comparable to that of private sector workers for positions of comparable responsibility and direct compensation.” The resolution proposes that an independent federal review panel be created to make such adjustments, and suggests that sole jurisdiction over the changes be given to federal courts and not state courts because of “inherent conflicts of interest.”

Ralph Benko, a senior adviser at the conservative American Principles Project who worked with ALEC to develop the language, has concluded that the frameworks offered by two U.S. Supreme Court cases (Energy Reserves Group v. Kansas Power & Light and United States Trust Company of New York v. New Jersey) offer a promising legal opening for those who want to go after pensions. “Now there's at the very least a persuasive, legitimate argument that we can do this,” Benko says. “Yes, it will require litigation and be challenged by the courts, but gosh, we have a strong case here.”

-snip-

Benko has worked with lawmakers from Arizona on some of the new approaches, and expects that state to be among the first to test the waters. Because of protections in the Arizona constitution, the first step would be to send a ballot measure to voters in 2012 revising state constitutional language that protects pensions. This is a step that lawmakers are reportedly considering. A related proposal would make a change that is bound to attract the attention of legislators: It would abolish the pension system for elected officials.

You can find more information on what this group is up to, and the harm its model legislation has already done, in the compilation topic with hundreds of replies with links to articles about the American Legislative Exchange Council (ALEC).

[highplainsdem]

1. kick

[rzemanfl]

2. Florida is forcing me to quit to keep the pension I now have. I

see now what the attack is. Florida's pension system is solvent, but they are going to bankrupt it by not letting new employees join it. Fuck.

Why can't I find a lawyer with the balls to file a class action against the state?

[spooky3]

3. This is already happening in Ohio.

[highplainsdem]

4. I know the changes in Ohio will increase what state employees pay into the pension fund, but if I

understand this new ALEC legislation correctly, its intent is to slash accrued retirement benefits -- those already earned. So public employees near retirement and expecting a certain pension would suddenly find that they'd be paid a much smaller pension. Basically, this would let the state raid the pension fund. This sounds like it should be illegal, and the article makes it clear ALEC is expecting legal challenges, but they also expect to win. And they're planning a ballot measure in Arizona to change the state constitution so it no longer protects pensions.

[spooky3]

5. Ohio's plan also slashes vested benefits for STRS.

COLAs have already been reduced and a further reduction is proposed.
The benefit formula goes from being based on high three years' pay to high five years', which will be lower for most people especially if you didn't work in the same system for 35 years.
People will need more years to qualify for retirement.
And so on--check it out at the strsoh site.

All these changes reduce the benefits of people currently vested in the plan. The state if passed would be reneging on earned benefits.

[highplainsdem]

6. More about this in a series of articles in the Washington Examiner:

The series was written By Rich Danker of American Principles in Action, the group working with ALEC on these bills and planned legal actions.


Part 1:
http://washingtonexaminer.com/opinion/op-eds/2011/04/bad-accounting-hides-americas-coming-pension-disaster

This is the "shock doctrine" part of the series, trying to convince people of the "coming pension disaster" (unless pensions are reformed in a way that will be a disaster for the workers).


Part 2:
http://washingtonexaminer.com/opinion/op-eds/2011/04/yes-states-can-cut-excessive-government-employee-pensions

This focuses on the legal aspects of breaking contracts to destroy pensions:

Fortunately, states under the gun have another way out. Pensions are generally considered contracts between the employer and employee, but that does not mean they are sacrosanct. In 1983 the U.S. Supreme Court ruled in Energy Reserves Group v. Kansas Power & Light that a contract may be impaired if there is a "significant and legitimate public purpose" behind the impairment, "such as the remedying of a broad and general social or economic problem."

This interpretation and the court's earlier finding in Blaisdell, enabling state adjustment of contracts during economic emergency, means that states have the ability to restructure contracts like vested pension benefits when conditions meet such a threshold.

Some states including New York, Illinois and Arizona protect pensions from being diminished or impaired in their constitutions. However, the Government Accountability Office noted in 2007 that "these protections can be amended if voters feel the need to rebalance priorities as fiscal pressures increase."

Arizona lawmakers are considering referring a measure to the ballot that would do this, and states burdened with similar provisions should consider doing the same thing.

Part 3:
http://washingtonexaminer.com/opinion/op-eds/2011/04/blueprint-genuine-public-employee-pension-reform

This is the part of the series that mentions ALEC's model legislation, and that says the most about how accrued pensions will actually be slashed:

As explained in Wednesday's column, there is a legal case to be made for rewriting pension contracts when the situation calls for it. States have the recourse to get out from under burdensome commitments that threaten their economic livelihood. Backed by Supreme Court case precedent, they can amend their laws and constitutions to allow for pension payouts to be scaled back to fix an economic emergency.

For states that meet this threshold (according to Northwestern professor Joshua Rauh, there are seven whose pension systems are slated to go insolvent by the end of the decade), equalizing retirement benefits to comparable positions in the private sector would be a good start.

The state treasurer would have an independent review panel extrapolate those comparisons. Workers would recover a reasonable amount in the pension restructuring, and citizens would not bear the brunt of tax increases or service cuts to pay out large pensions.

Emphasis added.

Workers would recover a reasonable amount in the pension restructuring...

Translation: State workers be allowed to keep a pittance while the state government, controlled by Republicans, raids the pension fund...and then probably gives those accrued pension beneifts away as tax cuts and subsidies for the wealthy and corporations.