NJ Cops | Page 12

12 NEW JERSEY COPS ■ JULY 2014 Courts rule that COLAs and Pension Funding are contractual rights Historically, June brings a flurry of activity both in Trenton and the courts. This year was no exception. A renewed interest arbitration law, an important agency fee decision and budget sparring have dominated headlines the past several weeks. But, while all are important, two recent decisions involving pensions for public employees stand out and must be addressed now. NJ State PBA Legal Corner Robert A. Last week, the New Jersey courts delivered Fagella, Esq. two significant – and favorable – decisions involving pensions for law enforcement officers and all public employees generally. The first involved the suspension of cost of living increases (COLAs) for retirees enacted by Chapter 78. The second involved the governor’s refusal to make the appropriate pension contributions required by Chapter 78. In both instances, the New Jersey State PBA brought lawsuits to enforce these rights. More than a dozen other unions joined us. In CWA, State PBA, et al. v. Christie, the Appellate Division addressed the lawsuit we filed last year, which contended that the “suspension” of the COLAs contained in Chapter 78 violated the rights of both existing and future retirees. The trial court had dismissed our claims, concluding, in rather simplistic fashion, that the court did not have the authority to compel funding by the legislature for retiree benefits. We appealed, and the Appellate Division reversed. In that appeal, the Attorney General’s position was that COLAs are discretionary and are Paul L. not part of the pension “benefits” system. In Kleinbaum, other words, COLA increments are not autoEsq. matic under law, but must be specifically enacted by the legislature each year. The Appellate Division disagreed, holding, as we argued, that COLAs are as much a part of the overall pension “benefit system” provided to PFRS participants as the base benefit itself. The court then held that a pension is a “contract” between the state and employee – it is not a gift. The court based this conclusion on a 1997 statute which provides a “non-forfeitable right” to vested pensions, and COLAs are an inextricable component of that right. Prior court decisions have refused to provide a specific characterization of vested pensions as “contractual.” This is the first time a Zazzali, Fagella, Nowak, Kleinbaum & Friedman Representing the New Jersey State PBA, local PBAs, and law enforcement officers for more than 40 years: Contract negotiations and interest arbitration; Contract grievances and grievance arbitration; All disciplinary appeals and unfair practice charges; Discrimination and whistleblower cases; Disability pension appeals; All aspects of State and Federal litigation; State PBA Legal Protection Plan; Practice before PERC, Civil Service Commission, PFRS and other State agencies. www.zazzali-law.com [email protected] Newark One Riverfront Plaza Suite 320 1037 Raymond Boulevard Newark , NJ 07102 Tel: [phone] Fax: [phone] Trenton 150 West State Street 3rd Floor Trenton, NJ 08608 Tel: [phone] Fax: [phone]