In 2011, the legislature eliminated future automatic cost-of-living adjustments (COLAs) for members of the Public Employees’ Retirement System Plan 1 (PERS 1) and the Teachers’ Retirement System Plan 1 (TRS 1). As we wrote in an April 2011 policy brief,

In 1995, the legislature passed a bill providing retirees in PERS 1 and TRS 1 an automatic COLA. The COLA was not linked to inflation—retirees would receive it no matter the economic conditions. Recognizing that it would be expensive, the legislature reserved “the right to amend or repeal this section in the future and no member or beneficiary has a contractual right to receive this postretirement adjustment not granted prior to that time” (RCW 41.32.489 and 41.40.197).

The 2011-13 budget included the elimination of these COLAs. In the final fiscal note for SHB 2021, the state acutuary estimated that eliminating the COLAs would reduce total public employer spending by $7.6 billion over 25 years, including $2 billion over the 2011-13 and 2013-15 biennia.

The Washington Education Association and other groups sued. Jordan Schrader of the Tacoma News Tribune reports that a Thurston County Superior Court Judge issued a summary judgment earlier this month. From the decision:

Plaintiffs moved for summary judgment on the ground that the UCOLA is a vested contractual benefit and the State cannot repeal that benefit without offering an offsetting benefit. The plaintiffs argue that the 2011 action — the repeal itself — has no offsetting benefit, and therefore the action was unlawful.

The decision notes two previous cases (Jacoby from 1970 and Navlet from 2008), and states that it “must follow the binding precedent” of those cases.

Under that precedent, the State is prohibited from reserving the right to unilaterally terminate the UCOLA. The UCOLA was vested because employees began work based, partially, on the promise of a UCOLA. Further, the parties agree that the State did not offer any off-setting benefit when it terminated the UCOLA. The State’s actions therefore violated existing law and summary judment to the employees is warranted as a matter of law.

But,

This Court is aware that our Supreme Court may ultimately abandon a black letter approach to the prohibition on reservations of rights. The high court may distinguish COLAs from the core retirement rights at issue in Jacoby and Navlet. COLAs are generally implemented to create flexibility during economic shifts, and this state has weathered a major economic shift that required such flexibility.

Promises were made in flush times that are unaffordable today. Many states face the question of whether they are able to reduce pension benefits to members of their retirement systems. The Center for Retirement Research released a report on the legal questions for states earlier this summer; I wrote about it here.