Rhode Island's public-sector unions were headed to court Friday to sue the state over the pension overhaul law passed last year.
"We have said all along that this is a violation of the Rhode Island constitution," Robert Walsh, the executive director of the National Education Association Rhode Island teachers union, said in an interview.
Attorneys representing state employees, teachers and municipal workers in the state-run Municipal Employees Retirement System and retirees already collecting pensions were to file the action in Rhode Island Superior Court, arguing that the legislative overhaul of signed contracts was illegally unilateral.
They seek a temporary restraining order for the changes, which are scheduled to take effect July 1. In the absence of a TRO, the unions expect to pursue action.
"We had suggested all along that we all sit and negotiate. They didn't," said Walsh.
The state, if the courts uphold the law, expects to reduce its unfunded liability by $3 billion. It created a hybrid plan merging conventional public defined-benefit pension plans with 401(k)-style plans. Rhode Island also included a suspension of cost-of-living adjustment increases for retirees and raised the retirement age for employees not yet eligible for retirement.
Rhode Island became the first state to change core benefits for current workers.
Judge Sarah Taft-Carter will preside. Taft-Carter last September ruled that the retirement system is essentially "an implied contract" between the state and its employees. She allowed eight public employee unions to proceed with a separate lawsuit.
Treasurer Gina Raimondo trumpeted the bill, which Gov. Lincoln Chafee also supported. "The reality was that the system was at a breaking point," Raimondo said in a lengthy interview shortly after the bill passed.
But Walsh accused Raimondo of creating a "manufactured crisis" to impose draconian cuts in benefits. "This is a high-stakes game. The state had a very expensive publicity machine out there. They were comparing the pension benefits to weapons of mass destruction, only there were no weapons of mass destruction."
Messages seeking comment were left Friday with Raimondo's and Chafee's office.
According to the Pew Center on the States, Rhode Island's pension system is only 49% funded and has a $13.4 billion liability. Pew considers 80% an acceptable threshold.