Dear Mayor:

The League attended the second meeting of the Joint Legislative Committee on Public Employee Benefits Reform.

The focus of the meeting was to discuss the legal parameters of reforming the pension system.  In response, Principal Counsel for the State Office of Legislative Services, Peter Kelly, issued a legal opinion which provided in part that

“…legislation that has the effect of detrimentally altering the retirement benefits of active members of State-Administered retirement systems who have accrued at least five years of service credit, or of retired members, would be unconstitutional as violative of the federal and State constitutional proscription against impairment of the obligation of contracts”.

Any impairment, reduction or revocation of employee pension contract is prohibited by chapter 113 of the Public Laws of 1997. That statute provided a non-forfeitable right to receive pension benefits to any employee who has attained five years of service in the retirement system.  The non-forfeitable right does not pertain to medical benefits, only pension benefits.

The legal opinion also found that chapter 133, P.L. 2001, which gave us N/55, “…represented a modification of the contract which, having been accepted by the members, cannot be detrimentally altered”.

The OLS opinion confirmed the findings of the League’s January 2006 COPE report that the Legislature cannot modify or alter n/55 or the retirement benefits of an employee who has accrued at least five years of service in the system. The Legislature can only make changes prospectively.

This meeting was dedicated specifically to fact finding as it relates to pension benefits. It will continue in this vein before moving on to discussion of health benefits. The Committee issued the following meeting schedule for the remainder of the month:
Thursday, August 24 and Thursday, August 31 at 10:00 a.m. in room 11 of the State House Annex.

The legal opinion by OLS is available for download by clicking here. You may also contact Shirley Cade at the League office (609) 695-3481 ext.14 for a copy.

Any questions on this communication can be directed to Helen Yeldell at ext.12.

Thank You