A class-action settlement in the lawsuit over Rhode Island's 2011 law overhauling pension benefits is in the hands of lawmakers after a state Superior Court justice signed off on it.
"The court is satisfied that the 2015 settlement agreement is fair, adequate, and reasonable,"
Continuing the litigation, she said, would take time, create uncertainty, and cost money.
"The court finds that the settlement offers concrete and immediate benefits to [union] class members," Taft-Carter said.
Taft-Carter held a series of fairness hearings on the matter in late May.
Shortly before midnight, Rhode Island's House finance committee approved an $8.7 billion budget for fiscal 2016 that includes the additional expense for the pension settlement, estimated at around $230 million.
Gina Raimondo, then the state's general treasurer and now governor, championed the 2011 Rhode Island Retirement Security Act, which bond rating agencies at the time called a credit positive. Moody's Investors Service rates Rhode Island's general obligation bonds Aa2. Fitch Ratings and Standard & Poor's rate them AA.
The far-reaching package created a hybrid plan merging conventional public defined-benefit pension plans with 401(k)-style plans, among other measures.
Several public sector unions challenged the law as unconstitutional and rejected a compromise that former Gov. Lincoln Chafee and Raimondo offered in February 2014.
Raimondo said the new settlement preserves 92% of the savings from the 2011 legislation.
"I remain grateful to all the parties that we were able to reach agreement," Raimondo said in a statement Tuesday night.
Taft-Carter called the plaintiffs' reliance on pro-union state Supreme Court rulings in Illinois and Oregon misplaced.
Rhode Island, she said, has no provision comparable to the pension protection clause of the Illinois' constitution while in Oregon, justices ruled that the state had considered no alternatives to lowering cost-of-living adjustments on retirement benefits earned before legislative changes.
"[In Rhode Island], the defendants did consider a number of alternatives," Taft-Carter said, referring to pre-2011 changes that failed to remedy the pension system's severe underfunding.
State officials originally estimated that Rhode Island could boost its pension funding level from 42% to 56%. The Pew Charitable Trusts considers 80% an acceptable threshold.
Three unions -- police officers in the state-run pension system, and the Cranston local police and fire unions - still oppose the compromise, but unanimous approval is not necessary, as it had been for the last settlement.
According to St. John's University law professor Anthony Sabino, litigation fatigue had set in.
"It serves all of them well to put their differences aside and move on," he said. "The judge recognized the rights of the parties to come to a mutually agreeable solution, and left it at that."
The ability of Democrat Raimondo to shepherd the bill through a blue-collar state resonated with Anthony Figliola, a vice president with Empire Government Strategies in Uniondale, N.Y.
"Ironically, it was a Democrat, whose party typically receives overwhelming support from labor unions that structured this scheme to stop the financial bleeding," he said.
State officials expect the measure to save about $4 billion through retiree benefit reductions.
The settlement, among other measures, shortens time intervals between suspended cost-of-living adjustment, or COLA payments, from the once every five years specified in the 2011 legislation to once every four for plans that are not already 80% funded.
Retired state Superior Court Chief Justice Frank Williams, whom Taft-Carter appointed special master, 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.
