Montana teachers take pension argument to court

Montana teachers take pension fight to court trying to preserve annual inflationary increase

Associated Press

HELENA, Mont. (AP) -- A judge told teachers in Montana Wednesday that he hopes to make a decision before the start of the year on their request to maintain pension inflationary increases until their challenge to pending cuts can be fully decided.

The lawsuit, filed by the Montana teachers union and six retired and current employees, challenges cost-saving cuts to their pension payments, a move retirees argue is unconstitutional.

A separate legal challenge has been filed by other public employees against the way pension overhauls similarly affected their guaranteed annual benefit adjustment.

The overhaul measure affecting teachers was passed this year by lawmakers and signed by the governor. It cuts the annual inflationary increase for retirees from of 1.5 percent to .5 percent starting in January. The lawsuit says that the inflationary adjustment took the average retirees annual benefit from $12,995 in 2000 to $15,537 this year.

A recent report on the Teachers' Retirement System says the legislative changes balance that program in about 20 years. Without the cuts to the retirees, it won't balance for about 30 years.

Retirees argue the system can be fixed without cutting benefits for retirees who are counting on the money and expected they would be getting it as part of their employment deal.

District Judge Mike Menahan of Helena, a former lawmaker, told both sides after oral arguments that he wants to make a decision on the preliminary injunction request before next month.

Lawyers for the teachers argued the pension benefit is a contractual right that cannot be changed by the state.

"A pension is contributed to by the employee, the employer and the state and after a full career an employee gets a defined benefit pension," attorney Karl Englund told the judge

The state argued the changes were necessary, and that employment benefits are constantly changing. The inflationary increases didn't go into place in their current form until 1999, and changes were reasonable to deal with pending shortfalls.

"There is no reasonable expectation ... that it isn't going to change," said Michael Black, with the attorney general's office.

Other changes not being challenged by the lawsuits have increased contributions from both employers and employees.

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