In Cranston Police Retirees Action Committee v. City of Cranston, No. 2017-36 (June 3, 2019), the Rhode Island Supreme Court concluded that a municipal ordinance “the promulgated a ten-year suspension of the cost-of-living-adjustment (COLA) benefit for retirees of the Cranston Police Department and Cranston Fire Department who were enrolled in the City of Cranston’s pension plan” was not a taking of the pension plans’ members property.

Takings mavens should skip to page 27 of the opinion for the good stuff. First, the court assumed that the plan members possessed “property.” A COLA benefit, once vested, is property, and the parties did not challenge the trial court’s conclusion on that issue. Second, the court rejected the contention that the suspension of COLA benefits was a physical invasion or a Lucas economic wipeout. Slip op. at 30-31. This was a regulatory taking, analyzed under Penn Central‘s three-part ad hoc test. Slip op. at 31.

  • Economic impact: “the cumulative impact of the COLA suspension on CPRAC’s members was significant.” Slip op. at 32. But (and there’s always a “but”) the impact was temporary. (Ten years is “temporary?” Many retirees we know would disagree.) And it’s not like the suspension included the base payment, just the COLA adjustment.
  • Character of the government action: “The City did not ‘physically invade or permanently appropriate any of the [retirees’] assets for its own use.” Slip op. at 32. And its motivation was to “improve the health of the City’s pension system.” Id.
  • Interference with investment-backed expectations: The opinion doesn’t expressly deal with this factor, and assumes that the retirees had valid expectations, which they backed by investing their time and careers. 

In short, the court viewed the ordinances as one of those “adjustments of rights for the public good,” which the city didn’t have to pay for.

Cranston Police Retirees Action Committee v. City of Cranston, No. 2017-36 (R.I. June 3, 2019)