316 P.3d 889
N.M.2013Background
- Petitioners are retired public education employees who seek mandamus to compel the Education Retirement Board (ERB) to apply the COLA formula in effect at their date of retirement for the remainder of their lives.
- In 2013 the Legislature enacted SB 115 amending NMSA 1978 § 22-11-31 to reduce future COLA amounts (effective July 1, 2013) in response to a declining funded ratio of the ERB plan (about 60.7% as of June 30, 2012).
- The 2013 amendment reduces prospective COLAs based on funded ratio, years of service, and annuity relative to a median annuity; it leaves underlying annuities unchanged.
- Historically the ERA has provided COLAs tied to annual CPI changes; the statutory COLA has been revised repeatedly (multiple amendments since 1967) and until 2010 allowed negative adjustments (subject to a floor at retirement level).
- Petitioners rely on Article XX, § 22(D) of the New Mexico Constitution and Pierce v. State to argue that COLAs, as applied at the date of retirement, are part of vested property rights; the State contends COLAs are legislative, nonvested expectations subject to change.
- The Supreme Court was asked to decide whether the Constitution protects a retiree’s right to future COLAs calculated under the formula in effect at their retirement date and thus whether SB 115 is unconstitutional as applied.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether COLA is part of the vested "retirement benefit" protected by Article XX, § 22(D) | COLA is inseparably tied to pension value and thus constitutionally vested once eligibility matures | COLA is a separate, prospective, legislatively created expectation tied to CPI and not part of the substantive annuity | COLA is not a vested property right; until paid it is a year-to-year expectation and not protected by the Constitution |
| Whether SB 115 (2013 amendment reducing COLAs prospectively) violates retirees' constitutional rights and warrants mandamus relief | SB 115 unlawfully reduces constitutionally protected COLA rights and thus ERB must apply prior COLA formula | SB 115 validly modifies prospective COLAs to preserve actuarial soundness; mandamus not warranted | SB 115 does not violate the Constitution as applied; writ of mandamus denied |
Key Cases Cited
- Pierce v. State, 121 N.M. 212, 910 P.2d 288 (N.M. 1996) (recognizes vested property interest in retirement benefits upon meeting statutory maturity; specific amounts governed by statutes in effect at maturity)
- Montoya v. Blackhurst, 84 N.M. 91, 500 P.2d 176 (N.M. 1972) (writ of mandamus may be used to challenge statute's constitutionality when no adequate remedy at law exists)
- Bd. of Regents of State Colls. v. Roth, 408 U.S. 564 (U.S. 1972) (property interests are defined by state law and statutory entitlements)
- Zucker v. U.S., 758 F.2d 637 (Fed. Cir. 1985) (COLA is a government-created expectation and not property protected by the Takings Clause)