University of New Hampshire Law School
Final Examination: Property and the Constitution
Professor Calvin Massey
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Spring Semester 2014
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One Week Take Home Examination
Instructions:
This examination consists of one essay question with a word limit of 2500 words. If you use Times New Roman 12 point font with one-inch margins all around you should produce about 335 words per page, or roughly a limit of 7 ½ pages. The examination answer is due in the Registrar’s office no later than 12 pm (noon) on Friday, January 17, 2014.
If you think additional facts need to be assumed, please make and state reasonable factual assumptions.
Question One
The cost of pensions promised to public employees of the State of Issaquah, a state of the United States, exceed the funds available to pay those pensions by an estimated 100 billion dollars. Issaquah has determined that it cannot pay the full amount of its promised pensions. The Governor and his staff have created several alternatives to deal with this crisis and have asked you, the Governor’s chief counsel, to review them and advise him about the legal problems, if any, that they may pose. The Governor particularly desires you to recommend which alternative is most likely to survive any legal challenges to its validity, and has asked you to make any suggested changes that might improve the legal validity of the option you prefer. The Governor notes that federal bankruptcy law makes no provision for the bankruptcy of a state.
The alternative proposals follow:
A. Enact legislation that limits public employee pensions to 75% of the promised amount until the unfunded public pension liability is reduced to 5 billion dollars or less.
B. Enact legislation that reduces public employee pensions by a percentage that is equal to the percentage of the total public pension liability that is unfunded. (E.g.: The total public pension liability is 150 billion dollars and the unfunded portion is 100 billion dollars.)
C. Enact legislation that suspends 50% of public employee pensions until the total pension liability is fully funded, at which point the amount of pension payments shall resume at the originally promised rate, plus an amount that will fully amortize the suspended pension payments over a fifteen-year period.
D. Enact legislation that eliminates all public employee pensions for public employees who have not yet vested in the pension plan.