Nine public employees filed suit on Friday to overturn portions of a new law that trims future retirement benefits for employees to rein in escalating costs of Oregon’s Public Employees Retirement System, The Oregonian reported. The lawsuit seeks to eliminate provisions enacted through Senate Bill 1049 that require employees to contribute to their pensions, as well as new limits on salaries used to calculate retirement benefits. The employees contend that the resulting loss of retirement benefits is unconstitutional, a breach of contract and an “illegal taking” without compensation. Combined, those provisions are expected to reduce pension costs for public employers by about $150 million in the next two-year budget cycle. That’s about 10 percent percent of the savings expected from the bill, a majority of which came from delaying repayment of the system’s $27 billion deficit.
Hundreds of coal miners moved one step closer to returning to work at two idling Powder River Basin mines yesterday, after a federal judge approved the sale of mines owned by bankrupt coal giant Blackjewel to previous owner Contura Energy, the Casper (Wyo.) Star Tribune reported. Contura said that it planned to “reinstate immediately” 500 jobs at Eagle Butte and Belle Ayr mines if the sale is finalized. But the sale hinges on the final approval of the federal government, after it objected to outstanding royalties and leasing terms of the Wyoming mines. “It’s in everyone’s interest to return these properties to productive use as soon as possible,” U.S. District Judge Frank Volk said at yesterday’s hearing. The judge approved the sale despite myriad objections from creditors. The sale to Contura comes more than five weeks after Blackjewel filed for bankruptcy, lost a key creditor and closed 32 mines across the country — all on July 1. About 1,700 workers found themselves out of work indefinitely. In addition to approving the sale of the two Wyoming mines and one West Virginia surface mine to Contura, Volk also authorized the sale of several other mines and equipment speckled throughout the Appalachian region to seven additional companies during the two-day sales hearing. Read more.
In related news, coal miners who’ve been protesting in Kentucky for days after their employer went bankrupt and their paychecks bounced got some relief yesterday in the form of $1 million from a former coal baron, Bloomberg News reported. Ex-Cumberland Resources Ltd. founder Richard Gilliam said he will give $2,000 apiece to 508 workers waiting to be paid by Blackjewel LLC. Gilliam, who started a charitable foundation with his late wife in 2010 after selling Cumberland, said in an emailed statement that he hopes the money “will act as a bridge” for the miners until they’re paid. On Monday, the company said that it would set aside revenue until the workers are paid. Last week, Peabody Energy Corp., the largest U.S. miner, said it had hired 30 of them. Read more.
Kentucky miners protesting unpaid wages during the bankruptcy case of coal company Blackjewel LLC scored a win in court yesterday, Bloomberg News reported. The company will hold some of the proceeds from the sale of coal mined in Harlan County, Kentucky, until workers there are paid, an attorney representing Blackjewel said in a hearing in Charleston, West Virginia. The move comes after Acting U.S. Secretary of Labor Patrick Pizzella asked the court to halt the movement of coal from the mine until workers get June wages. Blackjewel violated the Fair Labor Standards Act by not paying miners for work done in June, making the approximately 100 train cars loaded with coal and sitting in Harlan County “hot goods,” attorneys for the labor department wrote in a motion filed yesterday. “The portion of the payment that is, in the government’s view, attributable to the coal that is subject to the FLSA, we will not spend,” said Stephen Lerner, partner at Squire Patton Boggs US LLP representing Blackjewel. “We will commit not to spend it.” Judge Frank W. Volk said during the hearing — which some miners attended — that legal questions remain around the transport and sale of the coal. Volk may hear arguments on the issue as early as Tuesday and said the coal won’t move until the Labor Department motion is resolved. Judge Frank W. Volk said during the hearing — which some miners attended — that legal questions remain around the transport and sale of the coal. Judge Volk may hear arguments on the issue as early as today and said that the coal won’t move until the Labor Department motion is resolved.
Out to save the retirement plans of over 1.3 million pensioners, the U.S. House of Representatives passed legislation that seeks to address a nationwide multi-employer pension funding crisis by providing low-interest loans to help fund the institutions, Chief Investment Officer reported. Called the "Butch Lewis Act," named after a Vietnam War veteran and pension activist, the bill seeks to address a situation that advocates say continues to get worse. It would establish a new division in the federal government to monitor and issue low-rate bonds and loan the proceeds to pensions. “These plans are failing at an alarming rate,” says AARP, an advocate for the bill. “About 12 percent of workers with vested multiemployer pensions are in plans expected to run dry within 20 years. And the plans’ weak safety net is getting weaker.” It’s a downward-spiraling issue as union membership numbers decline and contribution rates fall. Union employers in industries vulnerable to non-union competition, such as mining and construction, are losing business and contributing to pensions less as a result. Some companies such as lollipop maker Spangler Candy have had to shore up additional funds in recent years, nearly doubling its contribution rate, with approximately 54 percent of its contributions diverted to individuals who’ve never worked for them in the past, said House Ways and Committee Chairman Richard Neal (D). The bill passed the House garnering support from every Democrat and 29 Republicans, through a 264-169 vote. The bill faces uncertain prospects in the Senate as some Republicans have called the measure a “bail-out” that doesn’t address core issues that brought the problem about in the first place.
Workers who retired after years of working for Sears Holdings Corp. banded together earlier this year to complain when the retailer’s bankrupt shell terminated their life insurance plan. Those benefits were potentially worth thousands of dollars to heirs of the former employees. Now the Sears estate has responded with a proposal that would pay them about $135 each, Bloomberg News reported. It’s another blow to workers who’ve seen livelihoods disappear as the department store chain, once the biggest in the U.S., slid toward bankruptcy. Sears filed for court protection last year and sold its stores and most of its assets to a unit of Eddie Lampert’s ESL Investments Inc. in January. The deal left behind the Sears estate, which is responsible for settling old debts, including the life insurance plan. The retiree plan provided policies to about 29,000 former workers with death benefits between $5,000 and $14,500, according to a new court filing that lays out the estate’s proposal. A smaller group of a dozen retired senior executives had policies with death benefits between about $356,000 and $2.7 million. The proposal to modify the plan would terminate the plan and award eligible Sears retirees an unsecured claim of $5,000. But given the estate’s limited resources, holders of unsecured claims will receive estimated payouts of 2.3 percent to 2.7 percent, according to the filing — or about $115 to $135.
Coal miners angry about a lack of pay during Blackjewel LLC’s bankruptcy are preventing a train from leaving one of its Kentucky mines, escalating tensions as the cash-strapped company scrambles to sell assets, Bloomberg News reported. A groups of miners since Monday have taken shifts blocking railroad tracks outside Cumberland, Ky., preventing a train from exiting a Blackjewel-owned coal mine, Mayor Charles Raleigh said in an interview. About 40 miners were at the tracks on yesterday, he said. Both creditors and miners have criticized the way Blackjewel has handled its bankruptcy financing, which started on July 1. A federal judge last week approved an expedited sale process for several Blackjewel coal mines, resulting in a $8.1 million down payment from Contura Energy Inc. to help keep the company afloat.
The Labor Department released a final rule to make it easier for small businesses to band together to create joint 401(k) retirement plans for workers, the Wall Street Journal reported. The rule, which takes effect Sept. 30, broadens the ways companies could join together to offer retirement accounts. Under the rule released yesterday, companies in different industries — for example, landscaping companies and real-estate firms — could create a joint plan as long as they are located in the same state or metropolitan area. The rule also would clarify that similar companies — for example two landscaping companies — located in different regions of the country could join together. Such arrangements, often called multiple-employer plans, are currently limited to employers with an affiliation or connection, such as a common owner or being members of an industry trade group. The rule means local chambers of commerce are more likely to sponsor retirement plans for companies affiliated with them.
U.S. senators are gearing up for a battle over how to fix the pensions of about 1.3 million retirees and workers in trucking, mining and other industries, The Wall Street Journal reported. These workers are covered by multiemployer pension funds. The Democratic-controlled House of Representatives approved a $48.5 billion package that offers forgivable loans to the most troubled plans. Senate Democrats introduced the same legislation, but its proposal is unlikely to gain the necessary votes from Republicans. The growing need for new capital is setting the stage for a showdown in the coming months after a government plan to address the issue missed its deadline last year. Many of the retirement funds have less than a decade of benefits left. Moreover, the government insurance program that backstops these pensions has warned it expects to run out of money by 2025.
Kentucky Gov. Matt Bevin signed pension legislation Wednesday after lawmakers delivered the bill he wanted to relieve regional universities and community social services agencies from crushing retirement costs, the Associated Press reported. Pension issues have cast a long shadow over the Republican governor’s tenure in office, as he and lawmakers have struggled to shore up one of the country’s worst-funded public pension systems. The GOP-dominated Senate voted 27-11 to end work on the bill, which replaces a similar measure that Bevin vetoed in April after lawmakers had ended their regular session. The measure took effect after Bevin’s signature. Soon after that, the legislature ended the high-stakes special session that Bevin convened last Friday in the midst of his reelection campaign. Bevin said the bill doesn’t resolve the state’s pension woes but called it a “responsible and appropriate next step in moving toward financial solvency.” The new law aims to bring relief to regional universities and quasi-governmental entities hit recently by massive increases in pension costs. The measure reflecting Bevin’s plan would spare regional universities and quasi-public agencies from the spike in pension costs by freezing rates at the much lower amounts for another year. It allows affected agencies to decide next year whether to stay in the state retirement system and face a big increase in contribution rates or agree to leave. State leaders warned that, without relief, some quasi-public agencies would be strained to the point of bankruptcy. Bevin’s proposal narrowly passed the GOP-led House but ran into less resistance in the Senate. The special session cost taxpayers about $66,000 per day.
The House voted yesterday to raise the federal minimum wage to $15 an hour by 2025, the New York Times reported. The bill would more than double the federal minimum wage, which is $7.25 an hour — about $15,000 a year for someone working 40 hours a week, or about $10,000 less than the federal poverty level for a family of four. It has not been raised since 2009, the longest time the country has gone without a minimum-wage increase since it was established 1938. The measure, which passed largely along party lines, 231-199, after Republicans branded it a jobs-killer, faces a blockade in the Senate, where Senate Majority Leader Mitch McConnell (R-Ky.) said he will not take it up. Only three Republicans voted for it, while six Democrats opposed it.
