U.S. Supreme Court Response Date on Lake Case Approaching

We know that many members of the Association remain interested in the Lake Case and its related current developments.

Here is a condensed history of the case: In 2011, the General Assembly reduced the standard health plan for State retirees from a noncontributory 80/20 plan to a 70/30. Twenty-eight retirees, led by former Supreme Court Chief Justice I. Beverly Lake, Jr., filed suit in 2012 to preserve and protect state retirees’ health care benefits.

Over the last ten years, the State of North Carolina asserted a variety of procedural and substantive defenses to test the merits of the case. In 2016, the Superior Court Judge presiding over the case certified the case as a class action, affecting some 220,000 state retirees who had vested benefits as of 2011.

The Superior Court Judge ruled that the plaintiff retirees were entitled to judgment against the State. The Judge’s Order specified that damages would be assessed after hearing expert witness evidence.

The State appealed, and a cumbersome appellate process ensued. In October of 2021, the case finally was heard in the North Carolina Supreme Court for a decision on the merits of the case. On March 11 of this year, the Supreme Court held that state retirees do have enforceable contract rights. The Court held that each retiree in the
class is entitled for life to the noncontributory health care benefits offered by the state at the time that retiree vested in retirement health care benefits. Those benefits are a part of that retiree’s contract with the State.

The Supreme Court sent the case back to the Superior Court for a determination of how much in damages each retiree should receive. In other words, what are the extra costs each incurred as a result of the 2011 action of the General Assembly?

Each side will hire experts, actuaries, to determine what those damages are and present evidence to the Superior Court. It will take several months for any more specific information to be available from the Superior Court. It should be stressed that this case covers only State government retirees, not local government.

On June 9, 2022, the State of North Carolina filed a petition for Writ of Certiorari with the United States Supreme Court requesting that the U. S. Supreme Court consider an appeal of the North Carolina Supreme Court’s decision. The Plaintiffs’ response is due on August 15, 2022.

NCRGEA Legislative Update: North Carolina’s 2023 Budget Takes a Good Shot But Misses Mark

June 28, 2022

This week, the legislative leadership rolled out a comprehensive budget addressing many current and anticipated matters, including recession and employee recruitment and retention. While doing so; however, the budget failed to support both active and retired government employees as had been hoped.

Retirees will receive an additional 1 percent bonus to an already scheduled 3 percent bonus this October. In all, retirees will receive a 6 percent bonus for the two-year 2021-2023 biennium, having received a 2 percent bonus in 2021, and 4 percent this fall. 

This past January, local government retirees, who are typically not included in general fund appropriations, receive a 2 percent bonus from LGERS Board of Directors, to be distributed as required by law in October 2022. Investment returns from the local government retirement system funded the bonus.

“I’d like to thank our legislative leadership for the grueling work they’ve done to create the budget,” said NCRGEA Executive Director Tim O’Connell. “It’s clear to me, though, that our legislative leadership remains somewhat deafened to the needs of retirees. While we recognize the impact 6 percent in bonus money has and will have on retirees – and it’s a positive impact – we have yet to make up for the years of pension value loss retirees have suffered since the Great Recession. 

“While we will continue to fight for our retirees, we do indeed recognize and thank legislative leadership for providing the largest bonus money seen in many years, and one of the largest in the United States. But we have more work to do.” 

No budget sails smoothly, and this year’s budget may experience some bumps in the days to come. House Minority Leader Robert Reives said, “I think it’s going to be a fight,” while others are calling on Gov. Roy Cooper to veto the non-amendable conference report. 

State Treasurer Dale Folwell praised the bonus and efforts by the General Assembly to provide additional money for retirees. “They’ve fully funded the pension plan and the state health plan, and given retirees one of the biggest bonuses in years. And paid for it.” (Will Doran, News and Observer).

Active employees will see increases starting July 1, with additional boosts from last year’s long session raises of 2.5 percent. In all, active TSERS will receive a 3.5 percent increase in pay. The average teacher pay increase will be 4.2 percent, with additional incentive bonus pay for teachers in underserved counties.

When questioned during the press conference yesterday by reporters, Senate President Pro Tem Phil Berger said the budget, “was the right budget for North Carolina at this time.” Leaders said that the 2022 budget was built to help the state weather current and predicted economic trends and also provide needed infrastructure improvements in state government facilities, water and sewer, as well as the sale of several exhausted properties. 

Staff and consultants for NCRGEA will continue to study the budget very closely for any additional items of interest to retirees. 

You can find the bill of text of state budget here: H103-PCCS20003-MLXR-9 (ncleg.gov)

NC Supreme Court Ruling On State Retirees’ Health Insurance Benefits: NCRGEA Releases Statement

“We are extremely pleased with the decision filed by the North Carolina Supreme Court today holding that eligible State employees have a vested right in a noncontributory health plan for life.  This Association has worked on this case to support retirees’ rights for almost 10 years.”

“As the Court stated, ‘These employees reasonably relied on the promise of this benefit in choosing to accept employment with the State.  They are entitled to the benefit of their bargain, which includes eligibility to enroll in a premium-free plan offering the same or greater coverage value as the one available to them when their rights vested.’”

“This decision has been a long time in coming.  We are grateful to the attorneys, led by Christopher Whelchel and Michael Carpenter at  the Gray Layton Kersh firm in Gastonia, with great assistance from attorneys Sam McGee and Gary Jackson, who have worked so hard for so long to protect retirees’ rights.  We are also grateful to AARP and the North Carolina Association of Educators for their support.”

“We agree with the Court’s determination that this dispute raises issues of profound importance to the hundreds of thousands of dedicated public employees who devoted their lives to serving their fellow North Carolinians, often for far less immediate remuneration than would have been available to them in the private sector.”

The Lake Case court decision may be viewed on the North Carolina Judicial Branch website

Six Reasons to Become an Advocate

In April, we will offer virtual training on issues facing retirees and strat- egies to best advocate for our retiree community. Join us and become a retiree advocate.

Here are six reasons to become an advocate:

  1. To safeguard your retirement, quality of life, and one of your biggest investments over the span of you career: your pension. While your pension benefits are protected by both the state constitution and case law, your voice to secure cost of living adjustments and other bonuses needs to be heard.
  2. To safeguard the future investments of our children, be they our own or those in our communities: We need teachers, law enforcement officers, first responders and all professionals who keep our communities safe, clean, and highly functioning. A well-funded and well-managed pension will allow communities to continue recruiting top candidates.
  3. To protect one of our state’s greatest, and most important, assets: North Carolina Retirement Systems is the 26th largest defined benefit system in the world. Year after year it remains one of the top ten best funded systems in the United States and fuels the state’s AAA bond rating. It is a gem worth fighting to protect.
  4. Because at the end of the day, advocacy is fun. We love our families, communities; we love North Carolina. Advocating shows our dedication and passion for the Old North State and her people.
  5. Because it fosters leadership: it takes gumption to stand up for something, no matter how right you may be on the matter. We are all called to be leaders. You have an opportunity to develop your leadership skills by participating in NCRGEA advocacy trainings.
  6. It is time to patch back together our lives from the destruction of the COVID-19 pandemic. You had to shelter in place for your health and for our public health, but that does not mean you have to sacrifice your voice, principles, or future.

We hope you will join us! Stay in touch by visiting ncrgea.com/advocacy/.