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LINCOLN, Neb.—A group of 411 current and former Nebraska state troopers, investigators and management have sued Gov. Dave Heineman and other state officials, claiming their increased contributions to the Nebraska State Patrol Retirement System are unconstitutional.
The suit, filed in U.S. District Court in Lincoln, Neb., alleges that increases to the employee contribution rates enacted by the Legislature are unconstitutional because the troopers had agreed to a fixed contribution rate when they began their employment. The rates differ depending on when the troopers were hired; the earliest start date of any of the plaintiffs was 1977 when the rate was 8%.
“The general view here is that the public employee pension plans are protected by the federal Constitution, the contracts clause of Article 1 Section 10 that no state may pass a law that impairs the obligations of a contract,” Gary Young, a partner at the plaintiffs' law firm, Keating, O'Gara, Nedved & Peter P.C., L.L.O., said in an interview.
“In Nebraska and several other states, courts have held that pension plans for public employees are contracts so when state officers unilaterally just change the terms of the pension contract in any substantial way, that impairs the right of the pensioner and that's what took place with this case,” Mr. Young said.
The state has increased employee contribution rates seven times since 1995, according to the court filing, to the current 19% of pay. The suit states “the percentage contribution of each plaintiff was contractually set by statute when each took employment with the patrol.”
The troopers are seeking all investment income “that were wrongfully taken by the defendants by enforcing pension contribution rates at any rate above that of the rate that the plaintiffs originally contracted for at the outset of their employment with the Nebraska State Patrol,” the lawsuit states.
The patrol retirement system is one of three defined benefit plans overseen by the $15 billion Nebraska State Investment Council.
A phone call to a spokeswoman for Jon Bruning, Nebraska attorney general, was not returned by press time.
Rob Kozlowski is a reporter at Pensions & Investments, a sister publication of Business Insurance.