Rhode Island Superior Court Judge Sarah Taft-Carter late Tuesday signed off on a class-action settlement in the lawsuit over the state's 2011 law that overhauled pension benefits.
"The court is satisfied that the 2015 settlement agreement is fair, adequate, and reasonable," Taft-Carter said after holding a fairness hearing on the matter two weeks ago. "In contrast to the uncertainty, duration, and high cost of continued litigation in the instant case, the court finds that the settlement offers concrete and immediate benefits to [union] class members."
State lawmakers must sign off on the accord. The House and Senate held hearings last week.
Gina Raimondo, then the state's general treasurer and now governor, championed the bill, which bond rating agencies at the time called a credit positive.
Several public sector unions challenged the Rhode Island Retirement Security Act as unconstitutional and rejected a compromise that former Gov. Lincoln Chafee and Raimondo offered early in 2014.
State officials expect the measure to save about $4 billion through retiree benefit reductions. The settlement, which lawmakers must also approve, figures to add nearly $300 million to the state's pension-fund gap of about $5 billion.
Retired state Superior Court Chief Justice Frank Williams brokered the agreement in January. Last week he told members of the Senate finance committee in Providence that Rhode Island needs to settle the dispute once and for all, to move ahead with myriad other challenges.
"It's time to put the case behind us and move forward," said Williams. "It's important for the self-esteem of Rhode Island."
New state Treasurer Seth Magaziner said further delays could hurt Rhode Island's bond rating.
Moody's Investors Service rates Rhode Island's general obligation bonds Aa2. Fitch Ratings and Standard & Poor's rate them AA.