Attention, state legislatures and city councils considering laws to lessen the burden of pensions for public workers: The Florida Supreme Court issued a ruling Thursday that addresses constitutional challenges to the state's 2011 pension overhaul. The good news for other governments that want to rein in public pension liability? The Florida court said the overhaul was not an illegal government "taking" and did not improperly interfere with workers' protected contract rights. The not-so-good news? The ruling is very narrowly tailored as an interpretation of Florida precedent and the state constitution.

Florida legislators were mindful enough of constitutional considerations that when they passed amendments to state pension law in early 2011, they made the changes prospective. Past pension benefits weren't affected by the amendments, but after July 2011, the new law said, state workers would have to contribute 3 percent of their gross compensation to a plan that had previously required no employee contribution; and they would have to forgo 3 percent annual cost-of-living adjustments to their pensions. The prospective consequences of the law seemed to comply with the Supreme Court's 1981 holding in Florida Sheriffs Association v. Department of Administration, which said that although past benefits are protected under the state constitution's contract clause, the legislature has the power to change future pension rights.

Nevertheless, state workers sued to block the new law, arguing that the changes violated not only a state law prohibiting any impairment of the rights of pension beneficiaries but also the state constitution's version of the Fifth Amendment's Takings Clause. A Florida trial court sided with the workers on both points, concluding that the Florida Sheriffs ruling did not justify sweeping reform that abridged employees' collective bargaining rights.

Thursday's ruling by the Supreme Court reversed the trial court but stopped well short of offering broad support for the constitutionality of pension cost-shifting. The court reiterated its holding from Florida Sheriffs that state law "does not create binding contract rights for existing employees to future retirement benefits" and said that the new law's changes were, indeed, prospective and thus legal. As for the takings argument, the Supreme Court said the amendments, on their face, do not preclude collective bargaining, so workers haven't been deprived of their rights.

By ruling narrowly that its old decision in Florida Sheriffs controls consideration of the new law, the court avoided the tough questions of whether the constitution permits the state's budgetary interests to trump contracts clause protection of pension benefits and whether lawmakers can limit collective bargaining "based on the principle of separation of powers and the legislature's exclusive control over public funds." The opinion discusses the high court's precedent on the first question, which calls for a balancing approach, but didn't end up engaging in that balancing.

We're going to see many more rulings this year on the legality of pension cost-shifting under the U.S. and various state constitutions. I hope the next one tackles the big issues.

I left a message for the workers' lawyer, Ronald Meyer of Meyer, Brooks, Demma and Blohm, but didn't hear back.

(Reporting by Alison Frankel)

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