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RTAC explains pension lawsuit settlement

On December 7, 2012, the Retired Teachers Association of Chicago (RTAC) issued an analysis by James Ward of the lawsuit that was recently settled between the Chicago Teachers Pension Fund (CTPF) and the Chicago Board of Education. The settlement, which has been described in an article at substancenews.net by Marybeth Foley, is explained below by RTAC's James Ward. Mr. Ward is also a trustee of the CTPF (representing retired teachers) and the functional vice president of the Chicago Teachers Union (representing retirees).

Details of RTAC vs. CPS legal battle January 10, 2008 - December 1, 2012.... RTAC WINS (so far) FOR THOSE RETIRED 1999 THROUGH 2004 WITH PETITION TO INTERVENE IN CPS LAWSUIT AGAINST PENSIONERS

By James F. Ward

Traditionally the salary deductions for pensions were deducted on the basis of a ten month school year with ten day pay periods as the unit of credit. In 1999 the CPS designed school calendars that did not quite fit the system provided in the pension law for pension deductions. This resulted in the unusual effect of having the pension salary be higher that the contractual salary. The CPS and the Pension Board accounted for the deductions as they always had with the pensions being slightly higher that they would have been with straight forward ten month calendars. In these years the teachers and the CPS paid for the higher calculation.

Sometime in 2003 the CPS saw that their strangely shaped school calendars were not dividing the annual pay in equal parts and the yearly salaries were slightly higher than the contracted salary. They said, “We will no longer pay on the higher calculation. Use the lower amount.” The Pension Board said, “What is done is done. We shall use the lower calculation prospectively, but we cannot change the benefits already granted to retirees from 1999 to 2004.”

The CPS sued in Circuit Court. On June 15, 2007 the judge ruled the CPS is right because the pension salary should not be higher than the contractual salary. But the judge did not, as of July 31, 2007, rule on what remedy should be imposed on the CPS, the Pension Board, or the 3500 pensioners. On July 31, 2007 attorneys for RTAC filed a petition asking to be allowed to intervene in the case. The judge’s decision was to grant the RTAC the right to be a party to the suit and represent the 3500 affected retirees. RTAC instructed its attorneys to argue that the judge should hold the pensioners harmless and make no changes to their benefits because they come with clean hands. They did nothing wrong but relied on the experts at the CPS and Pension Office to make irrevocable retirement decisions. After months of nail biting and some $40,000 or more in legal fees, your RTAC board is proud to note that we won the case in late December. What a Christmas present!

In short, Judge Nancy J. Arnold dismissed the CPS lawsuit and even vacated her original decision that the original calculations were wrong. She said the CPS had a limited time to file for corrections and the statutory time limit had expired. Many of the 3500 affected pensioners may never know what RTAC did for them in not HAVING THEIR PENSIONS REDUCED by 3-4% and paying back MANY THOUSANDS of dollars in what the CPS claimed was “overpayments.”

[The RTAC material contains Web links which add to the story].

CPS Appeals (January 2011). CPS has appealed Judge Arnold's decision and the Appellate court set aside the decision and sent it back to Judge Arnold. RTAC is fighting for the original decision but our feeling is that CPS is just trying to wear us down and run us out of money. The last hearing on the case was at the end of May 2011 where CPS asked for another continuance.

Another Hearing (July 2011). One of the latest developments is that Judge Arnold feels the Board of Education needs to come up with the names and the amount they "owe" since they were overpaid pension amounts during the years of about 1999 - 2004. The Board of Education is stating they were overpaid while the Pension Fund feels the retirees in question earned the amount they each received under the pension rules in effect then. Since RTAC represents about 50% of all retirees, the judge wonders how the rest of the "class" could be represented, thus having the names of these retirees would be important. She feels they should have their "day in court" just like everyone else. In short, this is far from over and there are mixed signals from all the sides represented in court at this time. Stay tuned!

Finally a Settlement (November 2012). After much give and take, there was finally a settlement where the pensioners were not required to refund the full amount of the 'error' but to just have their pensions 'adjusted' back to what CPS claims they should have been in the first place and to have their COLA adjusted accordingly. See the PowerPoint that CTPF Executive Director Kevin Huber presented at a Member Information Workshop on the Pension Overpayment Settlement HERE. In his verbal presentation, Mr. Huber indicated that the intervention by RTAC played a major part in reaching the settlement.



Comments:

December 8, 2012 at 8:30 AM

By: Bob Busch

'Extended Pay' origins

I wrote this in 2009:

The third Friday in September

If you remember why that day was important you have been in since 1983. Under the old pay plan that was the day we received our first paycheck of the school year. We started the day after Labor Day, had one weeks pay held back and got our first two week check that Friday.

After a strike in December of that year an optional plan for extended pay was introduced. The contract said 25% of us, by seniority, would be placed on it .All the rest of us could join if we wanted to, I did .But it came out the Union lied when Mr. Healey said it was a typo and 50% had to take deferred pay. As the years went along this was extended to 75% then 90% finally everyone. The original deal was 26 equal pay checks for everyone who earned vacation pay for Christmas and Spring break. Then we had a problem.

When we began in August those who got paid under the old plan made more money than the rest of us. It all centered around pay period 18, old timers got paid per day so what to you do with those summer days? The board came out with a classic deception -- They issued two lists of paydays one in September a different one in February. The difference was "Pay period 18."

I actually pinned down Paul in the Bogan lunchroom in front of 125 teachers and , I swear, got the famous “I’ll get back to you on that “ answer.

Everyone I could find who has to pay back anything was not on extended pay. In 1980 the union called for a week to cool off after the six week without pay fiasco of late 1979.It was not a strike and some people worked the week. In June of that year those who worked were docked for it because, like now they made more than the contractual salary. In some cases it was an entire weeks pay

December 9, 2012 at 2:22 PM

By: Al Moncrief

Public Pension Contractual Rights

If you do not like the terms of a contract, do not become a party to that contract. Once a party to a contract you are bound by its terms. That should not be so difficult to comprehend.

It's not "math," it's "contractual obligations." Why are legislatures not calling for breach of their state's corporate contracts? Why are public employee contracts the first target?

COLORADO COURT OF APPEALS CONFIRMS COLORADO PERA PUBLIC PENSION COLA BENEFITS AS CONTRACTUAL.

The Colorado Court of Appeals has reversed and remanded an initial District Court ruling that denied the contractual status of public pension COLAs in Colorado. The Court of Appeals confirmed that Colorado PERA pension COLA benefits are a contractual obligation of the pension plan Colorado PERA and its affiliated public employers.

A huge victory for public sector retirees in Colorado! The Colorado Legislature may not breach its contracts and push taxpayer obligations onto the backs of a small group of elderly pensioners.

The lawsuit is continuing. Support pension rights in the U.S. by contributing at saveperacola.com. Friend Save Pera Cola on Facebook!

In 1977, the (U.S.) Supreme Court clarified that state attempts to impair their own contracts, ESPECIALLY FINANCIAL OBLIGATIONS, were subject to greater scrutiny and very little deference because the STATE'S SELF-INTEREST IS AT STAKE. As the court bluntly stated:

“A governmental entity can always find a use for extra money, especially when taxes do not have to be raised. If a state could reduce its financial obligations whenever it wanted to spend the money for what it regarded as an important public purpose, the Contract Clause would provide no protection at all . . . Thus, a state cannot refuse to meet its legitimate financial obligations simply because it would prefer to spend the money to promote the public good rather than the private welfare of its creditors."

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