Cutting Pension Rights for Public Workers: Don\u27t Look to the Courts for Help

Every day we rely on public employees to provide us with a broad range of services necessary to daily life. These workers include public school teachers, fire and police, emergency medical technicians, park rangers, nurses just to name a few. As public employees, these people work for local and state government and they are compensated by us for their services through the taxes we pay. In general, these are modestly paid workers who also receive pensions when they retire after many years of work. Following the financial crisis of 2008-2009, government retirement trust funds significantly lost value and their long-term rates of return fell from levels necessary to pay benefits. With a more accurate assessment, the true costs of honoring these longstanding retirement promises became much more clearly in focus and future pension shortfalls appeared imminent. With little political appetite for raising tax rates to cover this shortage, state and local governments adopted pension reforms to meet the impending financial challenges. Pension reforms were carried out in many states and localities through legislative and administrative action. While they followed no uniform pattern, these policy changes had the overall effect of modifying existing public employee retirement rights in a way that reduced benefits, made benefits more difficult to earn or they completely overhauled existing pension systems. Not surprisingly, public employee and retiree groups found these changes to be harmful to their retirement expectations and they considered them a breach of trust. In over 2/3s of our states litigation followed challenging pension reform policies claiming that they were illegal or unconstitutional in their impairment of pension rights. This struggle is the principal focus of this article. After reviewing the history of American public employee pensions, describing the current state of pension systems and setting forth their structure, this article considers the last decade of litigation to pension reform policies. In more than 100 state and federal case decisions, workers and retirees have challenged the popularly-supported policy changes to their pension rights using a variety of legal theories and forms of argumentation. The review of these cases analyzes them from a theoretical perspective and it draws conclusions about the effectiveness of using a litigation strategy to overturn democratically adopted employment policies. The overarching conclusion resulting from this study is that both state and federal courts have overwhelmingly upheld state and local pension reforms and they have refused to find statutory or constitutional rights violations for government workers. The secondary conclusion is that in order to protect their future retirement income, these employees must build better popular support and legislative protection for their contributions to the public welfare in order to avoid future cutbacks in benefits