COLA Theft Justified – The Dummy Defense

New Jersey cannot afford to pay anywhere near the pension benefits promised to public employees so in 2011 the governor with the consent of the legislature decided to arbitrarily eliminate cost-of-living-adjustments for all retirees.  They did this through legislation which today got the approval of the New Jersey Supreme Court (6 – 1).  The six in their opinion felt:

cola justification

The main justification for this position comes on page 19:

In Spina, the Court was confronted with an ailing local public pension fund and a legislative response thereto that increased both the length-of-service requirement and the minimum retirement age. Id. at 393. The question for this Court became “whether the Legislature is free to rewrite the formula for the good of all who have contributed.” Id. at 402.

The Court acknowledged that the Legislature could, if it wished, impose contractual obligations on itself. Id. at 405. But to do so, the Court required a high bar for the creation of contracts by statute because contractual language in a statute cuts off the legislative prerogative to revisit its policy choices. Id. at 404-05. Writing for the Court, Chief Justice Weintraub explained that a contractual restriction on future legislative action “should be so plainly expressed that one cannot doubt the individual legislator understood and intended it.” Id. at 405 (emphasis added). That standard has remained the benchmark in this state for determining whether a contract has been created by statute.

The rest of the opinion proceeds from this germ and concludes that there is indeed doubt that each “individual legislator understood and intended” the creation of a contractual right to COLAs.

Does this then mean that no legislation can be enacted and upheld unless it can be proven in court that each individual legislator understood what they voted on? If so, then we are truly a lawless society.

36 responses to this post.

  1. Posted by Anonymous on June 9, 2016 at 2:48 pm

    The “good faith interpretation standard” of the legislation leads all reasonable people to come to the conclusion that the COLA is part and parcel of the pension benefit.

    So let’s bring this topic up-to-date: In return for a diminished pension formula for those in active service and a higher contribution rate Christie agreed to fully fund the pension liability over 7 years. This he proudly asserts he cannot afford to do. So the actives are paying more into a system that will provide a reduced DB with no adjustment for price inflation. The retirees are getting their promised DB but the Cola which they always believed and were told is guaranteed to be paid for life is terminated by six people.

    With all that said, the Governor’s back peddling, AFTER HE GOT HIS NEW PENSION SYSTEM ENACTED IN 2011 has been sustained at every turn by the court system of our state.

    Reply

  2. Posted by Anonymous on June 9, 2016 at 3:02 pm

    Why haven’t the unions file suit to restore all employEE obligations to the System to pre-2011 levels?

    Reply

  3. Posted by Anonymous on June 9, 2016 at 4:01 pm

    Well this is a perfect decision because if they will indeed enforce the 2011 changes Christy needs to Pony up the money that he screwed us out of according to law. He needs to make the pension contribution from last year and four this year in full That’s the Law isn’t it?

    Reply

  4. Posted by Anonymous on June 9, 2016 at 4:20 pm

    Why the hell does it take them so long to come up with this bullshit?

    Reply

  5. Posted by George on June 9, 2016 at 6:46 pm

    “Does this then mean that no legislation can be enacted and upheld unless it can be proven in court that each individual legislator understood what they voted on? If so, then we are truly a lawless society.”

    Contract law requires competent parties (fill in your own joke about the competence of the legislature). There are actually lots of rules that have to be complied with for a contract between private individuals to be valid. Add a pile more, including the general welfare, when the government is a party. Simply getting something on paper is not enough.

    The age old rule is the government enforces rules on the governed. How the government polices itself is the age old question who ‘watches the watchman’. But in general do not expect the entity that enforces the rules to comply with those same rules. A promise is something the ruled make and are held to, not the rulers.

    If they appeal this to the supreme court Fed gov might be able to force the state gov to pay the Cola’s because of the contract clause and the threat that Pres. Trump will send in the US Military.

    If future Cola increases are optional, why not revoke the past ones? What is the compounded total of all the Cola adjustments?

    Reply

    • Posted by Anonymous on June 9, 2016 at 8:59 pm

      Knowing lawyers & judges they’d argue if COLA’s were paid/received then it’s presumed EACH Legislator at that time surely understood and intended them to be unfogerable (sp) in so many ways – sorry off track got to thinking about old Nat!

      Reply

    • rulings are overturned and things change all the time.

      if economic times are not good, some stuff has to be off the table. the pensioners are still getting paid, be thankful they are not like central states……

      or are they????

      Reply

  6. Posted by Eric on June 9, 2016 at 8:38 pm

    George:
    Don’t waste your breath. There is no law. NJ is a Banana Republic. The court is a total joke, and the entire country knows it.
    Would you do business with NJ?
    I would NEVER.
    Eric

    Reply

    • Posted by Anonymous on June 9, 2016 at 8:49 pm

      I agree. That’s why I can’t wait to take what’s left of my pension and leave this joke of a state. That njsc is in christie pocket and everyone knows it. Total bullshit…….but with these Assholes even stevie wonder cold have seen this decision coming

      Reply

  7. Posted by Anonymous on June 9, 2016 at 8:55 pm

  8. Posted by Anonymous on June 9, 2016 at 9:29 pm

    Would’ t long-term past practice of providing cola increases demonstrate legislative intent?

    Reply

    • Posted by George on June 10, 2016 at 5:20 am

      Aren’t the COLA increases done automaticly based on the change in some index? Where is the legislative intent or voting or anything legislative.

      Reply

    • no. there are various reasons for past practice such as, we do it while we can afford it or its ok for now, but its not going to last….if they had half a brain, anyone could see this is not sustainable in weak economic times. its so obvious.

      Reply

      • Posted by dentss dunnigan on June 10, 2016 at 8:51 am

        Not only weak economic time ,with interest rates at zero for the past 8 years return on investments have been too low to support any future payouts .And a lot of people fee the stock market are such high levels that future gains will be limited .A lot of promises were made in good times which have certainly changed ,even US Tax Receipts Signaling Recession US federal personal tax receipts receipts are falling fast. So is the Evercore ISI State Tax Survey.

        The last two times the survey plunged this much, the US was already in recession.

        Reply

      • Posted by Anonymous on June 10, 2016 at 8:53 am

        Wrong!!! Past practice is a consistent pattern of providing colas for decades, the underprojecting the state budget and hiring political cronies/investment firms to mishandled pension investment to their financial benefit, at the expense of employees and retirees. The NJ pension investor lose millions yearly, get paid exorbitant fees and inspire of failures receive bonuses, so who are the pigs at the trowel? There is a bigger story that highlights abuse by elitist Republican operatives in and contracted throughthe Dept. of Investments. Where is the union oversight?

        Reply

  9. Posted by Anonymous on June 9, 2016 at 9:35 pm

    The statute created a non-forfeitable
    right to benefits, why wouldn’t the same statute create a right to a cola, when the long-term past practice under the statute supported such payments.

    Reply

    • unfortuneately, a “non-forfeitable right to benefits” is a fiction.

      if there is no money, there is no benefit.

      Reply

      • Posted by Anonymous on June 10, 2016 at 9:29 am

        Wrong!!! Past practice is a consistent pattern of providing colas for decades, the underprojecting the state budget and hiring political cronies/investment firms to mishandled pension investment to their financial benefit, at the expense of employees and retirees. The NJ pension investor lose millions yearly, get paid exorbitant fees and inspire of failures receive bonuses, so who are the pigs at the trowel? There is a bigger story that highlights abuse by elitist Republican operatives in and contracted throughthe Dept. of Investments. Where is the union oversight?

        Reply

  10. Posted by Anonymous on June 9, 2016 at 9:40 pm

    Each individual legislator voted for salary and benefit increases each budget cycle for decades, clearly a very real example of intent. The union’s need better legal representation at pension/benefit negotiations, present counsel sucks.

    Reply

    • Posted by Anonymous on June 9, 2016 at 9:50 pm

      The increases also for decades included colas, the intent is crystal clear. Does this ruling mean that the payments must be paid to insure the nonforfeitable right guaranteed by the legislation? Did paralegal interns write the union briefs?

      Reply

    • Posted by lukeu on June 10, 2016 at 12:54 pm

      Clarence Darrow couldn’t convince these judges of anything. They are clearly in the bag for Christie.

      Reply

  11. Posted by Javagold on June 9, 2016 at 11:15 pm

    HA HA. It’s just the start. Public takers your Pension Ponzi scam is finished.

    Reply

  12. Posted by Anonymous on June 10, 2016 at 6:11 am

    Just where does this ruling state the end of NJ public sector pensions? Post when you are sober, analysis appears off.

    Reply

  13. Posted by Anonymous on June 10, 2016 at 6:22 am

    John, why does it take so long to come up with these ridiculous verdicts, couldn’t they be decided much much quicker? Also is it possible the case could be heard in the US Supreme court?

    Reply

  14. Posted by Anonymous on June 10, 2016 at 7:48 am

    The absolute best COLA is to move out of New Jersey!!!

    Reply

    • With 30% of state pensions already going to out of state addresses it seems a lot of people have already figured that out ,but the democrats swear it’s for the weather !

      Reply

      • Posted by Anonymous on June 10, 2016 at 10:01 am

        I personally would move back to New Jersey if the weather was as nice as Florida

        Reply

        • In reality it’s better here ……Fla has too many storms and monsoon rains ,New Jersey weather it’s the biggest draw here ever travel the NJ parkway all you see are Canadian plates ….

          Reply

          • Posted by Anonymous on June 10, 2016 at 2:54 pm

            Bwahahahaha, keep telling yourself that. New Jersey has great weather for about a month and a half if that and you had worst storms thanwe’ve had in Florida in the last 10 years with more devastation. You have plenty of flooding you must have a short memory. Nothing’s happened in Fort Lauderdale and at least 10 years

          • Posted by Anonymous on June 10, 2016 at 2:55 pm

            And we have tons of Canadians here in the winter I wish they would just stop at New Jersey they need to listen to you New Jersey has much better weather than Florida especially from November until May

  15. Posted by MJ on June 10, 2016 at 9:06 am

    I thought it was kind of known that the reason for COLA suspensions in 2011 and increased employee contributions was to keep the pension scheme going a little while longer……I guess now we can all vote for the amendment to fully fund pensions so that NJ can fall completely off the financial cliff……..leaving not a whole lot left to fund other important services.

    Reply

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