Retirement Benefit Suit May Cost Washington State $12M

A possible settlement of a lawsuit brought by part-time community
college faculty may cost the state $12 million at a time when every
dollar is precious.

The Senate budget released this week includes $7 million to settle a lawsuit claiming the state owes retirement benefits to about 3,000 part-time teachers. Under the Senate proposal, the State Board for Community and Technical Colleges would take an additional $5 million hit in its existing budget to help pay the claim.

Attorneys for the state and the faculty say no formal settlement has
been reached. But they say the Legislature must act before any settlement can be presented in court.

At least one lawmaker says the community college board is now
paying for mistakes it made in administering retirement benefits.

“The chickens have come home to roost,” said Senator Ken Jacobsen (D- Seattle).

The class-action lawsuit contends the community college board
illegally denied retirement benefits to some part-time teachers. The lawsuit contends faculty who work at least half-time are eligible to participate in the state’s retirement plan.

But until three years ago, the state granted benefits only to those
who worked at least 80 percent of full-time hours. And while the Legislature lowered the bar to 50 percent in 1999, colleges counted only hours teachers spend in class, not the time they work outside of the classroom.

Two years ago, King County Superior Court Judge Steven Scott
ruled the state must count all hours worked, including time spent preparing for class and meeting with students. The ruling was retroactive to 1977.

Now action in the case is suspended pending settlement talks.

Neither Howard Fisher, the assistant attorney general in charge of
higher education litigation, nor Stephen Festor, the attorney for the part-time faculty, would comment about those talks.

Festor also wouldn’t confirm a Senate report that the lawsuit seeks
more than $65 million in damages, including employer and employee contributions to the retirement system, lost investment earnings, income tax liabilities and double damages for willful withholding of wages.

If the measure passes the Senate as part of its larger budget, the House and Governor Gary Locke still would have to approve a settlement before it could be presented to the court.

Jacobsen already is raising red flags. He cited the community college board’s “unethical” treatment of part-time faculty, who have complained for years about substandard pay and benefits. Jacobsen laid the blame for the lawsuit on board Executive
Director Earl Hale and his administration.

“They’ve had a policy of getting part-timers as cheaply as possible,”
he said. “Now it’s going to cost the state $12 million.”

Hale said budget realities were a big part of the problem. The community college board, he said, asked the Legislature for more money for part-time faculty benefits as early as 1993 but didn’t receive it until 1999.

The involvement of multiple state agencies — including the Department of Retirement Systems and individual colleges — made interpreting retirement regulations difficult, he said.

With a settlement in the works and more part-time faculty now eligible for retirement benefits, Hale said he hopes the state board can put the controversy behind it.

“We’re just pleased we were able to work this out,” he said.