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The Spokesman-Review Newspaper
Spokane, Washington  Est. May 19, 1883

Teachers sue over pension change

Richard Roesler Staff writer

OLYMPIA – The state teachers union has filed suit over a new law that would undo a costly pension perk approved during the stock-market boom of the late 1990s.

The class-action suit, whose plaintiffs include Central Valley teacher Randy Jenson and Mead School District teacher Deborah Rose, argues that revoking the benefit would be a “manifest injustice” and a broken promise to retirees.

“Gain-sharing,” launched in 1998, steered some stock-market windfalls during economic booms into the pension benefits of state workers, teachers and other public employees. If the state’s retirement investment fund earns more than 10 percent on average for four years in a row, it said, half of anything over 10 percent would be added to pension benefits.

At least partly because of this, thousands of teachers and other workers switched retirement plans.

But as lawmakers started realizing two years later, what goes up can often come down – precipitously. And as the tech sector and related industries tanked, state budget writers realized that they needed those boom-year gains to balance out the downturns that typically follow.

The problem, though, was how to get out of a promise made to employees. After many proposals, lawmakers this spring settled on House Bill 2391, which replaces gain-sharing with a package of less-costly perks, including earlier retirement for some workers, a cost-of-living increase and other changes. Among those who objected: the state teachers union, the Washington Education Association.

On Tuesday, Gov. Chris Gregoire signed the bill into law. Within hours, the WEA – making good on a promise its assembly approved two months ago – filed a lawsuit challenging the elimination of gain-sharing. As the union noted, elimination of the benefit will cost teachers and other public employees more than $100 million in pension benefits over the next two years “and billions over the next 25 years” – which is exactly why state lawmakers were so eager to be rid of those commitments.

The suit argues that gain-sharing is a contractual right that the state cannot unilaterally do away with.

The case was filed Tuesday in King County Superior Court.