The 6th U.S. Circuit Court of Appeals affirmed a ruling on Thursday dismissing a lawsuit filed against the city of Chattanooga by retired firefighters and police officers over city reforms to their pension plans.
In 2014, the City Council amended city code governing the Chattanooga Fire and Police Pension Fund in an effort to save approximately $227 million over 26 years, according to a release from the Miller & Martin law firm, which represented the city in the suit.
"Since the 2008 financial crisis, the fund had incurred a nearly $150 million unfunded liability that threatened its long-term ability to pay benefits to retirees," the release said.
The primary amendment was a reduction to the cost of living adjustment, COLA, paid to retirees. This adjustment was reduced from a 3 percent annual increase to a smaller, variable rate averaging 1.5 percent.
In April of that year, the firefighters and police officers filed suit in Hamilton County Chancery Court alleging the amendment violated several provisions of the U.S. Constitution.
The case was removed to federal court in Chattanooga, and Senior United States District Judge Curtis Collier granted summary judgment against the plaintiffs in November 2015.
The firefighters and police officers appealed to the 6th Circuit in Cincinnati, Ohio, whose three-judge panel ruled unanimously that "retirees do not have a contractual right to a fixed three-percent COLA, because the City Code does not bind the Fund to the fixed COLA."
Attorney Zac Greene, who argued for the city in the appeal, praised the decision.
"This decision validates the city's effort to protect the fiscal health of the pension plan and ensure that firefighters and police officers receive the pensions they earned by their years of service," he said.
City Attorney Wade Hinton agreed, saying, "The fire and police pension reform is one of the most significant achievements in City government over the last decade."
"Those reforms — especially the COLA amendment — placed the pension plan on solid financial footing without a tax increase and gave the city budgetary flexibility to address other matters, such as increasing pay to correct disparities in the fire and police departments," Hinton said.
Craig Joel, president of the Chattanooga fire and police pension fund board, said the decisions made were necessary and carefully evaluated, but difficult.
"The entire process has been heart-wrenching. Any reduction in benefits for any member in any way is the antithesis of the goals of the [Chattanooga] Fire and Police Pension fund, but in this case the decisions were made for the longevity of the fund itself," he said.
"This was literally an issue of brother against brother and sister against sister."