North Carolina Appeals court: Governor should've avoided pension money

A North Carolina Appeals Court ruled that Governor Mike Easley was wrong to intercept $225 million headed to North Carolina state employee pension funds to help cover the 2001 budget shortfall because the state and federal constitutions protect them.

While all of the money ultimately was repaid to the retirement system funds and pension benefits didn't suffer, the 14 former and current state workers who first sued in 2002 want to ensure future governors can't divert pension benefits during a fiscal crisis.

"It's a great ruling for the teachers and the state employees," said Hardy Lewis, an attorney representing the plaintiffs. "It essentially says the government can't use the pension fund as a rainy day fund."

The Legislature ultimately returned the $130 million to the retirement system in five installments, the last one approved in 2007. The state employees who sued still want the state to pay interest on the intercepted money for the time it was held.

The State Employees Association of North Carolina, a 55,000-member union, filed a similar lawsuit that was delayed until the current case was resolved. Tuesday's decision "keeps retirement funds where they should be - with retirees who have dedicated their careers to serving the public," association executive director Dana Cope said.