Pension case appeal gets cold shoulder High court rejects county's effort to roll back increases

$3 million at stake

Former employees' suit got reform law tossed out last year

December 09, 1997|By Lyle Denniston and Tom Pelton | Lyle Denniston and Tom Pelton,SUN STAFF

WASHINGTON -- The Supreme Court turned down yesterday an effort by Anne Arundel County to save millions of dollars by rolling back controversial pension increases granted to some top county officials in 1989.

The high court refused to hear the county's appeal of a 1996 U.S. District Court decision that struck down a pension-cutting law.

Democratic County Executive O. James Lighthizer pushed for the increases in benefits near the end of his eight years in office in the 1980s, arguing that he needed to dissuade key employees from leaving before he finished his legislative agenda.

When Republican County Executive John G. Gary took office in 1994, he criticized the fattening of retirement checks for 82 appointed and elected officials as wasteful and self-serving. In 1995, he signed an ordinance that would have eliminated the increases and saved taxpayers more than $3 million.

Thirteen former employees who benefited from the increases -- including the auditor and chief administrative officer under Lighthizer -- sued the county to stop the rollbacks and won. U.S. District Judge Andre Davis struck down the pension reform law in June 1996.

The county appealed and lost, then tried again with the Supreme Court, arguing that the increases were improper because they were created by top officials scheming to enrich themselves.

The Supreme Court gave no reason for refusing to hear the appeal.

The decision marked the end of a long struggle characterized by some as an effort to rein in government excesses of the late 1980s and by others as mudslinging partisan politics.

For county government, it will mean paying about $3.4 million more to the pension fund, perhaps in the form of $675,000 annual payments for the next five years, according to a county financial report.

"I am disappointed, because there are a lot more ramifications here than just the pension issue," Gary said yesterday. "One issue is this: Does a legislative body have a right to correct an error of a previous legislative body? They can do this in every area other than contract law, and so I thought that they [the justices] would take this case up."

Glenn Cooper, a Bethesda attorney representing the plaintiffs, said he wasn't surprised by the high court's action because the courts have long held that legislatures cannot reach back in time to alter pension plans.

This would violate the contract rights of retired employees, Cooper said.

"This whole thing was purely political. I think it was a total waste of time. I had my name dragged through the mud for no good reason," said Joseph H. Novotny, a 59-year-old accountant from Crofton who was county auditor from 1965 to 1994 and was one of the plaintiffs.

The county attorney's office spent hundreds of hours appealing Davis' decision. No payments were made to outside lawyers, however, because all of the legal work was handled by salaried county attorneys, said Deputy County Attorney David Plymyer.

The county spent about $25,000 hiring an economist and an actuary for the District Court case, Plymyer said.

"It was an uphill battle, but it was the right thing to do," said Plymyer. The pension increase "was the worst kind of lame-duck legislation."

Under the Lighthizer pension plan, the retirement age for those covered was lowered from 60 to 50. The formula for calculating pension benefits for the first 20 years of service was boosted by 25 percent.

The new pension plan, initially fully funded, ran short of money during the administration of County Executive Robert R. Neall, a Republican who held office from 1990 to 1994. The shortage arose partly because of the large number of former state government workers he hired.

Those new hires received full credit for their state service, but no state money was transferred to the county to cover their benefits, leaving the fund more than $3 million short. That figure swelled after Neall and the County Council approved significant increases in county employees' salaries.

When the lack of money became a political issue, Neall limited the pension plan to those already in it. His successor, Gary, moved in 1995 to roll back the increases.

In eliminating the increases, the council rejected a recommendation by the county Pension Oversight Commission and the advice of county lawyers that the rollback would be unconstitutional.

In its unsuccessful appeal to the Supreme Court, the county argued that Davis had improperly applied the Constitution's clause protecting contracts from state interruption.

"The county's case had no substance," said Cooper, who represented the plaintiffs with attorney David Rothenstein.

Cooper said the pension increases were legitimate and aboveboard, passed during an open meeting of the County Council and signed by the county executive.

The real injustice, Cooper said, was that Gary falsely implied that the officials who benefited from the pension increases had acted improperly. That hurt former public officials of great integrity, Cooper said.

"No matter what the legal result, there was an unfortunate amount of name-calling against people who deserve a lot better," said Cooper.

Pub Date: 12/09/97

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