American Federation of Teachers – New Hampshire v. State of New Hampshire

Supreme Court Again Upholds Amendments to Retirement Statute
New Hampshire Supreme Court No. 2013-821
Friday, January 16, 2015

In this companion case to Professional Firefighters of New Hampshire v. State of New Hampshire, the New Hampshire Supreme Court again resolved issues related to the 2007 and 2008 retirement statute amendments, holding that NHRS members did not have a contractual right to a particular method for calculating pension benefits or for funding COLAs.

In 2007 and 2008, the legislature amended the definition of “earnable compensation” in RSA 100-A:1, XVII to exclude “other compensation.” In addition, the method of funding cost-of-living adjustments in RSA 100-A:41-a was changed. The plaintiffs and intervenors filed suit, arguing that these amendments violated the Contract Clause of the State and United States Constitution because the statute created a contract between NHRS and its members 1) to calculate pension benefits using all “earnable compensation,” which, under the un-amended statute, included “other compensation,” such as automobile allowances, educational assistance, and health and dental insurance waiver payments; and 2) to calculate annual cost-of-living adjustments (COLAs) using a particular method.

Using the “unmistakability doctrine” adopted in Professional Firefighters, the Court held that the language of the statute did not demonstrate an unmistakable intent by the legislature to contractually bind itself to a particular method of calculating pension benefits, and, therefore, the legislature did not violate the Contract Clause by changing the definition of “earnable compensation.” The Court noted, however, that this holding would not retroactively affect calculations using “other compensation” prior to the amendment. Similarly, the Court held that the legislature could freely change the method for funding COLAs because nowhere in the statute did the legislature unmistakably establish that COLAs fell within the umbrella of retirement benefits that the legislature is contractually obligated not to reduce.