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Courts

Baltimore fire and police pension changes ruled unlawful

Some pension reforms made to the $2.8 billion Baltimore City Fire & Police Employees Retirement System in 2010 were ruled unlawful by Baltimore Circuit Judge Julie Rubin.

In 2014, a federal appeals court upheld the reforms, but left the door open for further challenges under a different legal argument. In 2012, Judge Marvin Garbis declared the change unconstitutional in U.S. District Court in Baltimore, but 4th U.S. Circuit Court of Appeals in Richmond, Va., vacated that decision, saying the active and retired workers' constitutional rights were not impaired by the disparate treatment, but instead were a "mere breach of contract" for which the plaintiffs could seek remedy under state law.

Reforms implemented in 2010 by then-Mayor Stephanie Rawlings-Blake increased employees' contributions and replaced a variable benefit tied to investment returns with a tiered cost-of-living increase. Instead of annual increases that averaged 3% under the variable benefit, the 2010 pension reforms created a tiered COLA that gave older retirees 2% increases, while retirees under 55 did not receive an increase.

In the latest ruling, issued Jan. 2, Ms. Rubin said the variable benefit change was a breach of contract. She said Maryland common law prohibits the city from retrospectively modifying the plan if the changes would diminish or impair benefits for people retired or eligible to retire before the changes were made. The plaintiffs "held vested rights to plan benefits that the city could not lawfully unilaterally diminish or impair," the order said. The ruling does not address changes affecting active workers not yet eligible for benefits. Ms. Rubin noted that "the city is entitled to make prospective and reasonable unilateral modifications to the plan." A court date for resolving related issues has not been set.

City Solicitor Andre Davis said: "We remain optimistic about a favorable outcome when all is said and done."

Calls to City Council officials and police union were not returned. The pension fund referred calls to the city.