Judge Issues Decision in NYSHIP Contribution Litigation

ALBANY, NY (12/21/2012)(readMedia)-- RPEA has received an unfavorable decision in our NYSHIP contribution lawsuit. Suing on behalf of all current public retirees that our health insurance percentage contribution rates were not intended to be increased, RPEA strenuously argued that the legislation implementing collective bargaining agreements which included such increases for active employees could not be extended administratively to those who had already retired. The last time that NYSHIP contributions rates were raised in 1983, the rates for already retired public employees were "grandfathered."

The Supreme Court Justice who heard the case has granted the State's motion to dismiss the three causes of action which RPEA's attorney had pleaded in our litigation. The Court ruled that even though the Legislature failed to amend the basic law that specified the NYSHIP retiree contribution percentage rates, it modified such statute by passing an amendment to another subdivision "notwithstanding any provision of law" in which the President of the Civil Service Commission was authorized to increase such rates for "unrepresented parties and retirees." This amendment was passed at the very end of the 2011 Legislative Session under a "message of necessity" issued by the Governor.

In addition, the Judge found that there was no implied contract to maintain health insurance contribution rates at the level that existed when a public employee retires. This issue with respect to health insurance is in contrast to the constitutional provision which makes public employee pensions a "contractual obligation of the State." In addition, the Court rejected RPEA's contention "that the Legislature acted irrationally in determining that changes in the contribution formula for employees that were agreed to by unions could be applied to retirees as well."

Given the Court's decision, there still is the concern that the door is opened to unilateral increases in NYSHIP percentage contribution rates for public retirees.

The RPEA Board of Directors will review the Court's decision in detail and decide whether to appeal the decision to the Appellate Division of the Supreme Court and/or take such other course of action as may be possible.