United Police Society of Mt. Lebanon v. Mt Lebanon Commission (majority)
Annotate this CaseThe Mt. Lebanon Police Officer's Pension Plan provided for cost-of-living adjustments ("COLAs") to augment pension benefits for retirees. For the Plan years 2000-03 ("2000 Plan") by the United Police Society of Mt. Lebanon ("Union") and the Municipality of Mt. Lebanon, retired plan participants were eligible for yearly COLAs of 2% of the participant's final average monthly compensation until such time as the participant's benefits reached 90% of his or her final average monthly compensation. This provision did not differentiate between regular retiree participants and early retiree participants. In 2004, the COLA was changed for some early retirees (specifically those with fewer than 20 years of service), to reduce the benefit from 2% of the retiree's final average monthly compensation to 2% of the actual early retirement benefits ("2004 Plan"). No adjustment was made in the Plan with respect to the COLA cap of 90% of the participant's final average monthly compensation for any participant. The issue this case presented for the Supreme Court's review centered on the change from the 2000 Plan to the 2004 Plan. The municipality submitted to an actuary making the statutorily-mandated cost study (required by Act 205 - The Municipal Pension Plan Funding Standard and Recovery Act) incomplete and/or inaccurate information (although the municipality disputed this characterization). Thereafter, the municipality administered the plan term along the lines of the incomplete or inaccurate assessment that resulted, in effect unilaterally modifying both the plan and the CBA. The Commonwealth Court here ultimately determined that because Act 205 has statutory primacy over any CBA, the plan must be administered as understood by the actuary when it made its Act 205 cost study, even if this effectively altered a bargained-for term of the parties. The Supreme Court reversed and remanded: Section 305(a) of Act 205 required a municipality to obtain a complete and accurate cost estimate before the municipality adopted any benefit plan modification so as to have accurate information with respect to the plan's solvency. At the same time, a municipal employer's unilateral change of a mandatory subject of bargaining, without first negotiating with the union, interferes with the employees' collective bargaining rights, and thus constitutes an unfair labor practice. Accordingly, the Court held that it was error to impose a unilateral change to the Plan at odds with its plain language based on the results of an incomplete and inaccurate Act 205 cost study. The Commonwealth Court was reversed and the case remanded to effectuate a complete and accurate Section 305 cost study.
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