Posted at 12:15 p.m., Tuesday, March 18, 2003
Court sides with state in pension fund case
By John Duchemin
Advertiser Staff Writer
Circuit Judge Gary W. B. Chang ruled that the State of Hawaii Organization of Police Officers failed to prove that lawmakers in 1999 violated the state constitution by diverting $347 million in profits from the $7 billion ERS.
Plaintiffs will immediately appeal Chang's ruling, said Mark Davis, a Honolulu attorney representing SHOPO in the case. SHOPO and ERS, which has joined the lawsuit as a plaintiff, want a court order barring the legislature from tapping the pension fund's profits.
The police union also seeks return of the $347 million, which lawmakers diverted from the ERS in the late 1990s to help cover shortfalls in the state budget. SHOPO lawyers argue that lawmakers disregarded the potential effects on the pension fund's financial soundness, thus violating protections embedded in the state constitution. The constitution bans the government from acting in a way that would erode the ERS' long-term financial stability, argued Davis and two Alaska-based lawyers, Peter Maassen and Peter Gruenstein, who also represent SHOPO.
But Chang sided with the defendants the state and county governments which argued that no such constitutional rules exist. Rather, the governments are only required to pay for retirees' benefits as they come due, argued Archie Ikehara, a lawyer representing the state.
