(Adds comment from plaintiffs; background)
NEW YORK, April 11 Talks to end a legal
challenge to Rhode Island's public pension reform failed on
Friday, both sides said, putting the state on track for a
potentially costly trial against labor unions in a closely
watched battle over public-sector retirement benefits.
Firefighters, teachers and retirees involved in the lawsuit
had all agreed to a settlement. But police union members
rejected the agreement, prompting the state judge overseeing the
litigation to order the parties back to mediation on Monday.
"Due to a small group of union members, the settlement
agreement has failed and the mediation process has ended,"
Governor Lincoln Chafee and General Treasurer Gina Raimondo said
in a statement.
Rhode Island's overhaul of its public pension system has
been used by other state and local governments across the United
States as a model to rein in the ballooning cost of retirement
benefits for public-sector workers.
Rhode Island lawmakers and officials began making changes
several years ago. The biggest overhaul in 2011 suspended
cost-of-living adjustments, raised the retirement age, moved
workers onto a hybrid pension plan and reduced future benefits
for current employees. Those changes went into effect in July
But the moves led to lawsuits in 2009, 2010 and 2011 that
challenged the constitutionality of some changes. The settlement
was supposed to end all the litigation, while also preserving
more than 94 percent of the reduction in the pensions' unfunded
liabilities, according to Fitch Ratings.
Plaintiffs were notified on Friday morning that the state
had ended mediation, according to Ray Sullivan, a spokesman for
the plaintiffs, about 25,000 current and former public
"We have ... talked about the fundamental strength of our
legal argument and are now prepared to take the necessary steps
to proceed to trial," Sullivan said.
Confidentiality agreements constrained him from providing
details about which specific issues were sticking points in
mediation, he said.
"We entertained a path towards settlement because it
provided stability and predictability. We think that's something
our members deserve," Sullivan said.
State officials also said they would now prepare for trial,
which is set to begin Sept. 15.
"While we are disappointed this settlement was not
ultimately able to come to fruition, we continue to believe that
the pension changes enacted by our General Assembly are
constitutional," the governor and treasurer said in their
(Reporting by Hilary Russ; Editing by Meredith Mazzilli and