By Bryan Manabat
bryan@mvariety.com
Variety News Staff
THE U.S. Court of Appeals for the Ninth Circuit has affirmed a District Court for the NMI ruling that retiree Rosa Camacho is not entitled to cost-of-living allowances, or COLAs, as part of her retirement benefits.
The Ninth Circuit panel — Chief Judge Mary H. Murguia and Circuit Judges Susan P. Graber and Salvador Mendoza — issued the order on Nov. 20, citing the Commonwealth Supreme Court’s authoritative interpretation of local law, which answered the certified question in the negative.
Last year, the panel asked the local Supreme Court to determine whether COLAs for CNMI retirees are constitutionally protected and cannot be diminished. On Nov. 3, the CNMI Supreme Court issued its order, signed by Justices Pro Tempore Robert J. Torres Jr., F. Philip Carbullido, and Sabrina S. McKenna, finding that COLAs are not constitutionally protected under the CNMI Constitution.
The justices held that Section 8334(e) of the Northern Mariana Islands Retirement Fund Act of 1988 did not grant Class II members a constitutionally protected accrued COLA benefit under Article III, Section 20(a). While membership in the Retirement Fund is a contractual relationship, the court said only the core pension promise existing at the time of employment is constitutionally protected.
“Because COLAs were introduced after appellant Rosa A. Camacho joined the Fund, they were not part of her vested benefits,” the court stated. “The Commonwealth’s repeated amendments and suspensions of COLAs reflected policy adjustments rather than constitutional entitlements.”
Citing precedent from Colorado, Alaska, and Hawaii, the ruling noted that legislatures may revise or reduce COLAs without violating constitutional protections for public employee pensions.
Background
The CNMI established the Northern Mariana Islands Retirement Fund in 1980 for public employees. After the Commonwealth fell behind on contributions, retirees filed a class action lawsuit, which was settled with the NMI Settlement Fund named trustee. The settlement guaranteed class members at least 75% of their “full benefits,” as defined by statute and the Constitution.
In 2016, the NMI Settlement Fund informed Camacho that she had been overpaid due to a miscalculation involving past overtime compensation and that her future benefits would be reduced. Camacho filed an administrative appeal, arguing she had been underpaid because the Fund failed to provide COLAs.
The District Court for the NMI ruled that Camacho’s “Full Benefits” did not include COLAs, finding they were not statutorily guaranteed and were subject to legislative discretion as of July 26, 2013. The court also concluded that Article III, Section 20(a) did not guarantee COLAs because they were not part of Commonwealth law when Camacho joined the Fund in 1980.
Camacho, represented by attorney Jeanne Rayphand, appealed, seeking unpaid COLAs from 2009 onward at a rate equal to or greater than 2% annually, mirroring U.S. Social Security adjustments.
She has since asked the CNMI Supreme Court to reconsider its ruling.
Bryan Manabat was a liberal arts student of Northern Marianas College where he also studied criminal justice. He is the recipient of the NMI Humanities Award as an Outstanding Teacher (Non-Classroom) in 2013, and has worked for the CNMI Motheread/Fatheread Literacy Program as lead facilitator.
