In a matter that implicates some of the core principals underpinning AARP’s creation, AARP’s attorneys in conjunction with local counsel successfully fought an effort to unilaterally reduce the buying power of teachers’ pensions in Montana.
A group of retired teachers in Montana filed a lawsuit challenging the reduction of the Guaranteed Annual Basic Adjustment (GABA), which determines the annual adjustment to their pension payments. (Montana’s GABA is known as a “Cost of Living Adjustment,” or COLA, in other states and in the federal system). The Montana legislature enacted changes that the teachers argue violates the law.
Prior to the changes, teachers received a 1.5 percent increase annually in their pensions; the revised statute guarantees only a 0.5 percent annual adjustment and it conditions other adjustments based on the funding status of the pension system.
The retired teachers in Byrne v. State of Montana contended that Montana law makes it clear that they have a vested right in the 1.5 percent annual increase, based on both the language of state statutes and the Montana Constitution. Moreover, the suit argues, any unilateral change violates state contract law principles protected by the state’s constitution. On December 28, 2013, just days before the reductions were slated to begin, a state judge enjoined the state from implementing the reductions while the litigation was pending. On June 30, 2015, the State of Montana was permanently enjoined from cutting the retired teachers’ pensions.
AARP Foundation Litigation attorneys represented the teachers in conjunction with local counsel, Karl J. Englund, PC and Jonathan McDonald. AARP Foundation Litigation worked closely with AARP Montana, which had vigorously opposed the changes in the law.
What’s at Stake
It is simply not fair to unilaterally change promises on which people have relied, especially when their choice to spend a lifetime working for one employer is based on these promises. Moreover, those promises are critical to the retirement plans and decisions made by the employees in planning for the future. The impact of changing even a percentage point in cost of living increases has a significant – and often critical – impact on retirees who live on fixed incomes but face inevitable increases in the costs of food, shelter, clothing and medical care.
The Montana state trial court entered summary judgment for retired teachers in Byrne v. State of Montana.