PERS Defined Benefit GABA Lawsuit - AMRPE v. State

August 19, 2015

Judge Reynolds issued an order today (available here), clarifying that his previous order, entered on March 4, 2015 is only applicable to PERS members hired before July 1, 2013.  Accordingly, PERS members hired before July 1, 2007 keep the 3% GABA and those hired between July 1, 2007 and June 30, 2013 will keep the 1.5% GABA, but members hired on or after July 1, 2013 will be subject to the "sliding scale" GABA ranging from 0% to 1.5% as provided in HB 454 (2013). 

July 21, 2015

The PERS retirees, MPERA and the Governor’s office have entered into a Stipulation to Dismiss Appeals regarding the PERS GABA lawsuit.

The parties have agreed to dismiss their respective appeal and cross appeal of the District Court’s decision and will seek clarification from the District Court regarding whether Judge Reynold’s order, which was issued on March 4, 2015, applies to all PERS members or only to those who were members before the effective date of the GABA decrease. This clarification is intended to clarify that PERS members hired on or after July 1, 2013 will be subject to the "sliding scale" GABA ranging from 0% to 1.5% as provided in HB 454 (2013).

March 6, 2015

The State appealed Judge Reynolds’ decision to the Montana Supreme Court today.

GABA Decision

March 4, 2015

Judge Reynolds today granted PERS retirees’ request for a permanent injunction to prevent the Board from implementing the decrease in GABA under Section 5 of House Bill 454 (2013).

The Judge ruled that the PERS retirees have a contract right to the GABA increases and that the State’s reduction of the GABA to address the actuarial soundness of PERS was not “reasonable and necessary” and thus violated the contract clauses of the Montana and the US Constitutions.

Per the Judge’s order, the PERS retirees’ GABA will remain at either 3% for those PERS members hired before July 1, 2007, or 1.5% for those PERS members hired between July 1, 2007 and June 30, 2013, unless or until the Montana Supreme Court reverses Judge Reynolds’ decision.

January 13, 2015

The oral argument for the GABA lawsuit is scheduled for 2:00 p.m.

December 20, 2013

Judge Reynolds granted plaintiffs’ request for a preliminary injunction.  The opinion keeps the GABA at 3% for current retirees until the lawsuit is ultimately resolved.  Judge Reynolds emphasized that the injunction applies to current retirees.  However, MPERA adopted a rule (ARM 2.43.1311) that allows us to use a Court-ordered GABA when calculating service purchases, early retirement factors, and option 2, 3 and 4 benefits.  Therefore, MPERA will continue to use the 3% GABA for all purposes until the lawsuit is resolved. 

Please remember that this is only a preliminary injunction.  If the ultimate decision on the merits of the case finds the GABA decrease to be constitutional, corrections to retirement benefits and service purchases may be required.

December 13, 2013

The hearing for a preliminary injunction to prevent the Board from implementing the decrease in GABA under Section 5 of House Bill 454 was held on December 12, 2013.  Parties will submit proposed findings of fact, conclusions of law and orders by December 18, 2013 to Judge Reynolds, who will subsequently rule on the preliminary injunction.  As soon as we receive his ruling, we will post an update here.

Please note the ruling on the request for a preliminary injunction will be temporary, governing only what GABA is paid this January and each following month until a final decision is issued on the merits of the case.  Further, the final decision may differ from the initial decision on the request for a preliminary injunction and will be subject to appeal. In the meantime, if the request for a preliminary injunction is denied, until a final decision is issued, the GABA will be set at 1% for 2014 and paid to eligible retirees beginning in January based on the new law and current funding levels.  If the request for a preliminary injunction is granted, until a final decision is issued, the GABA will remain at 3% for eligible retirees and will be paid based on the law prior to the enactment of HB 454.  

If you have questions regarding the impact of the ruling on active members’ service purchases, early retirement factors or optional benefit calculations, please email mpera@mt.gov.

November 1, 2013

The Association of Montana Retired Public Employees, along with Russell Wrigg, Marlys Hurlbert, Carole Carey and I. Edward Sondeno filed a complaint against the State, the Public Employees Retirement Administration, the Public Employees’ Retirement Board, and Governor Bullock in the First Judicial District Court, Lewis and Clark County on October 31, 2013. 

The complaint alleges that the 2013 Guaranteed Annual Benefit Adjustment (GABA) changes to the Public Employees’ Retirement System (PERS) implemented by House Bill 454 violate the Montana and the US Constitutions.  The complaint was accompanied by a motion for Preliminary Injunction requesting that defendants be enjoined and restrained from taking any action to implement HB 454 that would reduce the GABA for PERS members and retirees.  The State filed a responsive brief and a hearing has been scheduled for December 12, 2013 to address the request for an injunction.

The matter is before Judge Reynolds and the plaintiffs are represented by Leo Berry, Chad Adams and Jessie Luther of Browning, Kaleczyc, Berry & Hoven; the defendants are represented by Mike Black and Stuart Segrest of the Attorney General’s Office.

 

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