Sacramento -- In what could blow a big hole in California's budget, a Superior Court judge ruled Wednesday that the state had acted illegally when it withheld a payment to the teachers retirement system and now owed the pension system $500 million.
If the ruling is upheld, it will make it more difficult for the state to balance its budget this year. Gov. Arnold Schwarzenegger will present his revised budget next week.
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Sacramento County Superior Court Judge Judy Holzer Hersher said the move was unconstitutional because it violated the retirees' contract with the state.
At issue was a payment -- usually made quarterly -- into a supplemental retirement fund that is meant to keep retirees payments in line with inflation.
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At the time, the administration argued that there would be no harm to the retirees. But Hersher disagreed.
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http://www.sfgate.com/cgi-bin/article.cgi?file=/c/a/2005/05/05/BAGBBCK6RK1.DTL