Tightening state and municipality budgets are to blame for cuts in benefits for retired public employees in both Colorado and Minnesota. Judges in two different states (Judge Robert S. Hyatt in Denver and Judge Gregg E. Johnson) ruled that the plaintiffs did not have a specific right to cost of living increases in their benefits.
While Hyatt agreed that the plaintiffs did have a right to their pensions, he also said the states had a right to change those benefits. For example, in Colorado, the judged stated that Colorado did not have to increase COLA benefits.
The lawyers for the Colorado and Minnesota retirees had tried to state that the retired employees had a right to these benefits and that the state had breached its contractual agreement. The retired public employees claimed that the state had deprived them of rightful property.
Usually, most benefit cuts only affect current employees. This is one of the first cases to cut cost of living increases for retired employees. Since this is a trial court ruling, it doesn’t hold as much legal precedence as higher courts. Other courts and even some politicians, however, may use this ruling for other cases. Legislatures in other states could start trying to cut retiree benefits.
Currently, states are experiencing major shortfalls. It is estimated that public pensions have shortfalls between $700 billion and $3 trillion.
The plaintiffs have not decided whether or not they will appeal the decision.
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- Harris, Andrew and William Selway. “Colorado, Minnesota Courts Throw Out Suits Disputing Retiree Benefit Cuts.”