Opinion ID: 2628033
Heading Depth: 4
Heading Rank: 3

Heading: Nature and extent of the infringement

Text: The COLA of course is intended to influence retirees' decision-making as to where to live after retirement. It can be said then that to the extent that the COLA is effective in causing retirees to remain in the state, it also works to deter them from exercising their right to live elsewhere. We think that this is acceptable because the COLA is reasonably related to the cost-of-living differential between Alaska and most other areas of the United States and because the COLA is a small part of retirees' retirement income. The fact that Alaska still has a higher living cost than most other areas in the United States has already been discussed and is reflected in the statistics employed by the superior court. The fact that there are currently a number of metropolitan areas in the United States with higher living costs than Anchorage  though not necessarily Bush Alaska  simply means that there is a cost disincentive for retirees to retire to those areas. This is an effect independent of the COLA. That is, if all retirees were paid a bonus of ten percent of their base retirement regardless of where they chose to live, there still would be a cost disincentive to retire to high cost areas such as Honolulu or Seattle. No Alaska program needs to be designed to make up for the high cost of living in such areas. At its core, the right to travel appears to be implicit in the federal structure of our national government. The right of free interstate migration finds its unmistakable essence in that document that transformed a loose confederation of States into one Nation. [26] Care must be taken to avoid imposing a penalty on free migration that would conflict with the constitutional purpose of maintaining a Union rather than a mere `league of States.' [27] The difference between a prohibited penalty and an allowance that neutralizes general cost-of-living differences may only be a matter of degree. If so, we think that the current COLA program does not exceed acceptable limits for two reasons. First, as already noted, the ten percent COLA is reasonably related to the current cost-of-living differential between Alaska and most other areas of the United States. Second, the cost-of-living allowance is a small amount  only ten percent of a retiree's regular monthly benefit. Moreover, relative to a retiree's actual state-related retirement income, the COLA is less than ten percent because most public employees have supplemental retirement income from employer-sponsored defined contribution programs. We do not mean to suggest that the state would be free to design a public retirement program under which retirees would forfeit a substantial portion of their retirement pay should they decide to move from the state. Any such program would properly be viewed with suspicion as a potential threat to the core values underlying the right of free interstate migration. If every state adopted similar programs, the character of our nation would be changed and retirees effectively might be barred from migrating to other states. But because the COLA payments are related to current cost-of-living differentials between Alaska and most of the rest of the United States, and because they are a small part of retirees' retirement income, we do not think that they infringe substantially on the right to travel. In Alaska Pacific Assurance Co. v. Brown, we reviewed a statute that adjusted and reduced workers' compensation benefits for workers who had moved out of the state. [28] The reduction was made in proportion to the ratio of the Alaska average weekly wage to the average weekly wage in the worker's state of residence. [29] The reductions could be significant. The worker in Brown had moved from Alaska to California. If he had remained in Alaska he would have received $551.86 per week, but as adjusted his benefits were reduced to $211.91 per week. [30] We noted that the purpose of the statute was to adjust benefit levels to the economic environment where recipients lived and that one reason for this was to avoid paying benefits that were so high when compared to a worker's actual living costs that they amounted to a disincentive to return to work. [31] Accepting the legitimacy of these purposes, we held that the statute was unconstitutional, finding it to be not well designed to achieve the objective of adjusting benefits to the cost of living of workers who lived outside the state. [32] This was because the statute did not use cost-of-living statistics from other states; rather it used wage levels which tended to yield an average benefit reduction of approximately 142% of the reduction in the cost of living. [33] There are at least two important points that serve to distinguish Brown from the present case. The first is the amount of the potential reduction in benefits. In the present case benefits cannot be reduced by more than ten percent, whereas benefits under the statute in Brown were subject to a reduction of more than sixty percent. The second point is that the purpose of the statute in Brown was to equalize real benefit levels between the worker's place of residence and Alaska. This purpose necessarily focused on the living costs in the particular state where the worker lived. Here the purpose is to neutralize the incentive to migrate from Alaska. This purpose only requires that we focus on the general cost-of-living discrepancy between Alaska and most other states.