The landmark pension agreement reached between the city and the local police and fire union has hit a roadblock.
A group of retirees has asked as Superior Court judge to block the pension deal, claiming the plan, which would freeze and limit cost of living increases (COLAs) among other changes, violates the Contracts and Takings Clauses of the Constitution and constitutes a breach of contract.
Through their lawyer James Kelleher, the retirees, who identify themselves as The Cranston Police Department Retirees Association and the Local 1363 Retirees Association, filed the class action suit earlier this month.
The retirees are asking for an injection that would stop the agreement in its tracks as well as damages equivalent to the money they'd lose from their pensions if the pension deal were to go through.
The retirees are all former employees hired before July 1 of 1995, though not every retiree is part of the suit.
The suit alleges the city violated the the Constitution when the City Council in April passed a pair of amendments to the pension plan, including the COLA changes, at a time when "the city had other less drastic measures available to it to achieve a balanced budget and increase pension funding that did not require the obligations it agreed to under the [plan]."
The retirees claim that they are entitled to the COLAs because their contracts were agreed upon through collective bargaining and the city does not have a right to "unilaterally change pension benefits" and by doing so, will "deprive the retirees of their property rights."
The $300 million unfunded local pension liability has hung over the city like a dark cloud in recent years and the annual required contribution, or ARC, to keep it solvent has been increasing and increasing — and the city has been falling further and further behind.
The pension deal, which still needs approval from a judge, is expected to save more than $6 million next fiscal year and tens of millions over the next few decades. And for the first time in years, the city will make the full ARC payment in next year's budget.
In response, city lawyers asked the judge to throw out the retirees' suit, arguing the passage of the pension ordinances "were reasonable and necessary to an important and legitimate purpose and are therefore lawful."
All parties are due to appear in court sometime next week.