Minnesota Unions Contest Law That Cuts Pay by 2%

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Government workers in Minnesota, including about 50,000 teachers, are challenging in the State Supreme Court a new law that reduced their paychecks by 2 percent in order to help balance the state budget.

But recommendations in California and Michigan for changes in the financing of teacher-pension funds have been withdrawn following widespread criticism from the teachers in those states.

Abrogates Workers' Claims

Lawyers for Minnesota's public-employee unions say that state's law, passed last December to help close a $312-million budget deficit, is unconstitutional because it abrogates the workers' constitutional claims to contract and equal-protection rights.

The state and the employee each contribute to an employees' retirement fund. The new legislation permits the state to reduce its contribution by 2 percent of the employee's annual salary for six months and to increase the employee's contribution by that amount. This would represent a savings for the state of $63.7 million.

A panel of three retired judges, appointed to hear the case for the state's district trial court in Ramsey County, last month ruled that the legislation should be given "great deference" because it was drafted in an emergency.

The retired judges heard the case to avoid a possible conflict of interest, since the active judges were also affected personally by the legislation.

Gary Green, the attorney for the Minnesota Education Association (mea), said that by reducing the take-home pay of employees without renegotiating their contract, the legislature had ignored the employees' rights under contract.

He added that even if the pension alone--which is delineated in legislation but not in the contract--had been changed, the union would charge that the contract had been violated. "Pensions are an implied part of the contract," he said.

The right to equal protection was also violated, the employees' lawyers said, because public workers bore the brunt of the state's action.

"It isn't a rational basis to distinguish between government workers and others as to who should have to pay off the state's debt," said Eric Miller, who is representing the mea.

Withhold Contributions

California's Gov. George Deukmejian last month proposed that the state withhold its contributions to the State Teachers Retirement Fund by about $20 million per month.

The Governor dropped that plan, however, when teachers' unions and members of the legislature harshly criticized it, said an official in the executive budget office.

In 1972, under the administration of then-Gov. Ronald Reagan, the California legislature reduced its contributions to the state pension fund by $72 million. That action, however, differed from the Minnesota measure because the payments eventually were made with interest.

A similar proposal was given to Michigan Gov. James J. Blanchard recently, but Mr. Blanchard said he would not consider it seriously.

Vol. 02, Issue 21

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