The suit, filed in First Circuit Court, is by the State of Hawai'i Organization of Police Officers on behalf of the 93,000 members of the pension fund.

The union ­ along with co-plaintiffs George Kaho'ohano hano, a retired Maui police captain, and police detective Loren Andrade ­ allege that ERS money belongs to ERS alone, and that the state constitution forbids the state from "raiding" the fund or refusing to pay its required annual contributions.

The state Legislature and Gov. Benjamin Cayetano were therefore breaking the law when they decided to put only $185 million into ERS between 1999 and 2001, instead of the required contribution ­ as determined by independent financial experts ­ of $522 million, the lawsuit alleges.The class-action filed today against the state over pension fund payments demands a return of the $346 million to ERS, a court injunction preventing the state from ever again taking money from the fund, and additional damages including the lost earnings that would have accrued had ERS invested the money.

"We want to put a big non-trespass sign on ERS ­ to make it clear that in good times or bad, it's not available," said Peter Gruenstein, lead counsel for the plaintiffs.

Gruenstein, a specialist in class-action pension cases with Anchorage, Alaska, law firm Gruenstein & Hickey, said he recently helped Anchorage police officers win a similar case in Alaska.

SHOPO is also represented by Anchorage lawyer Peter Maassen of Ingaldson Maassen; Will Aitchison of Aitchison & Vick in Portland, Ore.; and Mark Davis and Michael Livingston of Honolulu law firm Davis Levin Livingston & Grande.

The $8.4 billion ERS, which funds pensions for most state and local government employees, has struggled in recent years as the stock market and economic slump cut into the value of its assets. But the ERS has also been hurt by the state's refusal to fully fund the system in recent years.

Assets dropped from about $10 billion in 2000 to $8.4 billion in December 2001, a drop ERS officials blame on the state reneging on its funding requirements.

A recent actuarial report estimated the fund will require as much as $500 million in state contributions each year by 2009 ­ triple current state funding levels.

SHOPO president Tenari Ma'afala said the union is concerned that ERS will be rendered unhealthy if the state continues to take funds.

"Every month, every police officer pays 12.2 percent of his or her salary to our pension fund," Ma'afala said. "That pension fund is important to our future and our families' futures. It is simply wrong for the State of Hawai'i to raid the ERES and use its assets for the State's benefit."

The lawsuit comes as the state Legislature struggles to balance the budget and faces a $300 million revenue shortfall over the next two fiscal years.

It also comes a day after the state Senate Labor Committee unanimously approved a resolution calling for the state auditor to investigate the investment decisions of state Employmees' Retirement System.

The trustees are charged with overseeing the system that pays pensions for more than 30,000 former state employees and beneficiaries.

"Serious questions still have to be answered," said Sen. Sam Slom, R-8th (Hawai'i Kai, 'Aina Haina). "ERS feels like they've addressed the issues, but they haven't."

The ERS has come under increased scrutiny after trustees in February went against their investment adviser's recommendation and retained an underperforming investment firm, 3Bridge Capital, whose principals include a former ERS administrator.

The trustees voted instead to halve the assets under 3Bridge's control from $330 million to $165 million.

Legislators last month began pursuing the idea of an investigation into the management practices of the state pension fund.

Democrats and Republicans in the Legislature proposing a state audit into practices they believe are questionable, particularly the decision to retain 3Bridge Capital.

Former ERS administrator Stanley Siu is a partner and manager of business development for 3Bridge, which in recent years has been one of the worst-performing managers in the ERS portfolio.

Trustees said Siu's connection with 3Bridge had nothing to do with their decision to retain the firm.

Legislators have said the trustees should have terminated 3Bridge, rather than leave an impression of indecisiveness or impropriety.

They also have expressed concern about the portfolio's recent performance.

The system has made money in 32 of the past 34 years, but has suffered since 2000 because of global stock turmoil and economic troubles. It has averaged 6.8 percent returns over the past five years, below its 8 percent annual target.

ERS finances are audited annually by an independent accounting firm, but that financial examination differs from the evaluation of performance and practices sought by the legislators.

ERS officials say a state audit of the system is unnecessary.

An audit "would only reconfirm the challenges that ERS trustees and staff are already acutely aware of and are in the process of addressing," said Toby Martyn, chair of the ERS board of trustees, in testimony to the Labor Committee.

Sen. Colleen Hanabusa, D-21st (Nanakuli, Wai'anae, Makaha), a frequent critic of ERS investment policies, said the fund's actions are in serious need of examination.

"ERS, for me, is in the same category as traffic cams," Hanabusa said, referring to the photo enforcement system recently killed by legislative repeal after a wave of public criticism.

The proposed state audit of ERS has cleared the state House of Representatives and now goes to the Senate Ways and Means Committee.

If approved by Ways and Means, the measure would need a full Senate vote for passage.