An Alaska Supreme Court decision issued in late December will reportedly save the state from paying millions of dollars of unanticipated cost-of-living allowance payments to state retirees living outside Alaska.
That was the appraisal issued Jan. 2 by Alaska Attorney General Talis Colberg in the aftermath of the state's highest court rejecting claims in a class action lawsuit filed on behalf of some 10,000 nonresident retirees.
“If the nonresident plaintiffs had prevailed, the resulting cost in implementing such an outcome would have created an additional, unplanned burden to our state's retirement system,” Colberg said in a written statement.
The state pays a 10 percent cost-of-living adjustment to retirees who remain in Alaska, to partially make up for the high cost of living here.
In 2003 three participants in the retirement systems filed a class action lawsuit on behalf of some 10,000 nonresident retirees, alleging that class members were entitled to receive the cost-of-living allowance under the Public Employees' and Teachers Retirement systems.
The plaintiffs, led by Bob Gallant, a retired Alaska corrections officer now living in Hawaii, argued that the state's cost of living was as high as Alaska's, and that it was unfair for retirees there to receive less than their in-state counterparts. The plaintiffs called the in-state COLA “an unconstitutional restriction on the right to travel” and violation of equal protection provisions of the state and U.S. constitutions.
The Alaska Supreme Court disagreed.
The court found that the state had a legitimate interest in encouraging retirees to stay in state. Specifically, the court found that the state had a legitimate interest in providing retired public employees and teachers COLA payments to encourage them to remain in the state. The court said that providing these payments does not substantially infringe upon the rights of retirees who choose to live elsewhere.
The plaintiffs had also claimed that they were entitled to receive back payments, which would have multiplied the state's financial liability had the court ruled in favor of the plaintiffs on this issue.
The decision does not affect the right of resident retirees to continue to receive their 10 percent COLA allowance.
Incoming House Minority Leader Beth Kerttula, D-Juneau, said the complaints of out-of-state retirees would likely be looked at by the Legislature to make sure everyone was treated fairly; but it was unlikely the lawmakers would do anything to increase the system's costs. Kerttula said she was sympathetic to retirees living in high-cost areas.
“It isn't easy being retired in America,” she said, with rising medical costs and other expenses. Still, she said, it would be difficult to persuade the Legislature to expand benefits across the board.
“It's unlikely the Legislature as a whole would revise the (COLA) program,” she said.
A copy of the Alaska Supreme Court's decision in Public Employees' Retirement System v. Gallant is available online at www.state.ak.us/courts/ops/sp-6088.pdf.
Margaret Bauman can be reached at margie.bauman@alaskajournal.com.
Juneau Empire reporter Pat Forgey
contributed to this report.
