A state Circuit Court judge has denied motions from the state and city to dismiss a lawsuit filed against them by a police officers organization and the Employees' Retirement System over the withholding of $346.9 million in contributions to Hawaii's largest pension fund. Judge denies motions
in ERS suitBy Dave Segal
dsegal@starbulletin.comJudge Gary Chang ruled yesterday that the plaintiffs' attempt to have Act 100 declared unconstitutional can proceed on its merits. Chang will hear a motion by the State of Hawaii Organization of Police Officers on March 14 to certify the suit as a class action. He will take up arguments on the merits at hearings on summary judgment motions on March 17.
Act 100 was legislation that took effect June 30, 1999, permitting the state to use all of ERS' investment earnings over 10 percent to reduce state and county employer contributions over a two-year period. A suit initiated by SHOPO is asking that the withheld money be contributed to the fund. ERS, which intervened as a plaintiff, is seeking that Act 100 be declared unconstitutional and has not sought a return of the money
The state, along with the counties who intervened in the case as defendants, have argued that the Legislature has the constitutional right to decide how much it contributes to the fund.
The defendants contend the Legislature did nothing wrong when it determined in 1999 that it would not pay into the fund its mandatory employers' contribution as calculated by ERS' actuary.
"We were pleased with the ruling of the court," said Mark Davis, one of the attorneys representing SHOPO. "The members of SHOPO and the individuals we represent have been intent on seeking a judicial determination that the funds of the ERS must be protected against the whim of the Legislature when they are in a position of a cash shortage or need money for other purposes."
The ERS fund, which was underfunded by 16 percent at the end of the fiscal year on June 30, 2002, had assets of $7.34 billion as of Dec. 31, 2002.
Chang's denied the state's contention that individual members of the ERS did not have legal standing to challenge the constitutionality of Act 100. The city had claimed that the ERS, which was not seeking financial relief, was the real party in interest.
He also dismissed an argument by the defendants that the withholding of funds was moot because it was a past act, and rejected the state's contention that the claim was not right because of a lack of individual injury.
The state also urged the court not to rule on the constitutionality of Act 100 because they contended it was a political question and therefore a matter which should be left to the discretion of the Legislature. Chang, however, rejected the contention and found it to be an appropriate area for judicial review.
Employees' Retirement System