With the state Supreme Court considering the most significant public employee pension case in nearly three decades, it’s reassuring to see the governor come to the defense of taxpayers. For Jerry Brown, this case, a union challenge to portions of his 2012 pension changes, could determine his legacy on the issue.
He will be remembered either as someone who put a Band-Aid on a gaping wound, $374 billion of retirement debt and growing, or as the leader who meaningfully staunched the bleeding of public money.
In a surprise move, Brown recently took over defense of his law. Until then, the state Attorney General’s Office had, as it usually does, represented the state.
While a Brown spokesman would not comment on the reason for the change, it seems intended to ensure pressure from organized labor doesn’t undermine his legal case.
Former Attorney General Kamala Harris had at first balked at defending the law. Now, her appointed successor, Xavier Bacerra, must run for election next year and doesn’t want to antagonize politically powerful unions.
Brown’s opening brief in the Supreme Court case provides a full-throated defense of his law and, more significantly, unequivocally calls for fundamental changes to a legal doctrine blocking meaningful pension changes in California.
For decades, pension attorneys across California have said that once a public employee starts working, his retirement benefit formula can never be altered, not even for benefits he hasn’t yet earned.
For example, a firefighter in California, having been offered at his career start a pension equal to 3 percent of top salary for every year on the job, could accrue benefits at that level his entire working life.
The unalterable benefit level was considered a constitutionally protected “vested right” under a legal doctrine known as the California Rule.
Unwilling to reduce benefit levels for current employees’ future years of work, Brown, in his 2012 legislation, put only a tiny dent in retirement costs.
Nevertheless, labor unions challenged two provisions in court, claiming they violate the California Rule.
One ended egregious “spiking” that enabled workers to inflate their final year’s salary on which their pensions were calculated. Workers enrolled in county-level retirement plans in Alameda, Contra Costa, Merced and Marin were most affected.
The other provision eliminated “airtime,” which allowed employees to increase their pensions by purchasing additional years of service credit from CalPERS at what turned out to be discount rates.
Separate panels of the state Court of Appeal upheld the Marin County anti-spiking provisions and elimination of airtime. In doing so, they rolled back the California Rule.
So long as pension modifications are “reasonable,” they do not violate workers’ constitutional rights, the court panels said. Public employees do not have “an immutable entitlement to the most optimal formula of calculating the pension.”
If the Supreme Court upholds that ruling, Californians might finally be able to restore sanity to public pension benefits, as the Little Hoover Commission advocated back in 2011.
There’s a lot riding on this case — for Brown and for taxpayers.
— Bay Area News Group
