Consider the following:
A California Court of Appeal recently upheld a San Diego citizens’ initiative supported by 66 percent of voters in 2012. That initiative — requiring all new hires to be placed in 401(k)-style defined-contribution plans — was challenged by the state Public Employment Relations Board and local unions.
The California Supreme Court has agreed to hear another pension case involving the 2013 Pension Reform Law (PEPRA) which prohibits the purchase of “air time” to artificially boost pension pay-outs. The lower court found the statute lawful. The unions are fighting it vigorously.
The Marin County Employees’ Retirement Association v. Marin Association of Public Employees case, which directly challenges the “California rule,” is also at the state Supreme Court. A similar case is winding its way through the process so it may be a bit longer before we hear from the justices.
The Citizens for Sustainable Pension Plans is filing an amicus brief in the Marin case in support of the lower court opinion.
The California Policy Center reports that for 2015-16, 26 California cities and counties spent over 10 percent of all revenue collected on pensions. San Rafael has the dubious honor of being No. 1 in the state at 18 percent, leading to cuts in services and more taxes.
Gov. Jerry Brown, as mentioned in a recent IJ editorial, “has seen the state’s annual payment to CalPERS, the state’s largest public pension plan, rise 69 percent to $5.4 billion. And it’s expected to continue to rise.” Those tax dollars clearly could be used for other purposes such as needed infrastructure improvements for our dams.
Why has this generational theft been allowed to happen?
Primarily because of a judicial “concept” known as the California Rule. This imprudent court ruling advances the proposition that once a promise is made — after one second of employment — no changes in benefits can ever be made without providing offsetting gains.
Elected officials hide behind this “rule,” saying there is nothing they can do. We think there is. Place in every Memorandum of Understanding the following clause: “The pension benefits provided during the term of this contract are not to be construed as an express or implied promise of future benefits in the same or like amount but will be governed by any subsequent MOU negotiated by the parties.”
Public sector unions routinely finance certain candidates for elected office. Those officials, when negotiating MOUs, expect to receive similar compensation packages — even without union representation. This can impact both objectivity and tenacity in negotiations and is a clear conflict of interest.
The National Institute for Labor Relations Research reported that in 2016 unions spent $1.7 billion on political issues and lobbying. One wonders how much unions are spending in California on the litigations mentioned above and where all that money is coming from.
As also noted by the IJ editorial board, when Gov. Brown and our legislators want to act on items like the transportation bill, they can get it done in a week.
That same zeal is missing on pension reform.
Yes, the courts can help. Yes, better negotiation strategies can be used. Yes, more transparency can be utilized. And yes, more voters can become outraged as their quality of life is impacted due to staggering pension obligations — and with the deepening realization that the endorsement of generational theft is a moral outrage.
At the end of the day, voters must take action — as citizens did in San Diego.
As one former San Diego lawyer said, “When governments fail to act on problems such as with pension liabilities, the people have a constitutional right to pursue a citizens’ initiative by obtaining signatures on a petition and presenting solutions directly to the voters, bypassing the legislative body.”
Michael J. Lotito of San Rafael is a core member of Citizens for Sustainable Pension Plans, a Marin-based group focused on public pension reform.
