California governor favors new pension cuts

Jerry Brown

Court filings issued by the California Governor’s Office indicate Gov. Jerry Brown supports the idea of the state reducing certain pension benefits of current public workers, not just those of future hires. [Sac Bee]

In 2012, Brown signed retirement benefit reform legislation known as the Public Employees’ Pension Reform Act. The law restricted pension benefits for public employees in California who are hired after Jan. 1, 2013, and required those workers to contribute more toward their pension plans than previous hires.

The law prompted legal challenges from several public employee unions, with some of the cases now on their way to the California Supreme Court. At stake in the court cases is a host of issues relating to particular retirement benefits.

But, the cases have also led to a review of the so-called “California rule,” a legal precedent in the state that has barred Sacramento and local governments from reducing pension benefits for existing employees that they have offered over the last 60 years. Siding with Brown’s lawyers and against the unions, judges have maintained in a cluster of recent court decisions that public employees are entitled to reasonable pensions, but not necessarily the ones that are allocated based on the most generous formulas.

Brown’s office, which has taken the responsibility for the pension cases away from the California Attorney General’s Office, has embraced the rulings challenging the “California rule.”

“Many legal experts have criticized the rigid inflexibility of the union’s position, pointing out that it is contrary to contract clause principles, inconsistent with general contract and economic theory, and effectively depresses the salaries and benefits of new generations of public employees,” Brown’s attorneys stated in a legal brief filed in an ongoing case involving a Cal Fire union.

The governor’s office is battling Cal Fire Local 2881 in court over “air time” credits, a scheme in which workers can purchase extra years of service that are credited to their pensions. The 2012 legislation signed by Brown barred CalPERS, the state retirement system, from selling “air time” credits, effective Jan. 1, 2013.

Unions consider that aspect of the pension reform law to be a violation of the “California rule,” as it affected employees who began their jobs before the legislation took affect.

In the Cal Fire case, justices at the state’s 1st District Court of Appeal said in a ruling that workers are “entitled only to a ‘reasonable pension, not one providing fixed or definite benefits immune from modification.”

Currently, numerous government agencies in California are grappling with a recent decision made by the CalPERS board to lower its investment forecast, thus forcing state and local to agencies to contribute more funds to their pension plans. Locally, the city of SLO recently acknowledged that it is faced with an approximately $9 million budget shortfall over the next three years, largely due to pension fund shortcomings, and it may have to cut and/or charge more for city services as a result.

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5 Comments about “California governor favors new pension cuts”

  1. Factz Checkerz says:

    Anyone not yet familiar with the website Transparent California should immediately book mark it for ready and future reference.

    It sets out the full compensation packages by name or title for most current public employees by state, county, city, schools and special districts. As well as the current pension payments for your favorite former government workers by each pension plan.

    When you hear any government employee complain they are under-paid, over-worked and under-appreciated, be sure to look up the full costs of what we are paying them.

    Don’t let them whine about their ‘salaries” when in fact their full compensation package with benefits, perks and overtime costs the taxpayers almost twice as much as their “taxable” salary – geared to be one more duplicitous shell game to deflect tax payers from their real costs to us.

  2. Factz Checkerz says:

    Current public employees should count on a 60% reduction in their promised pensions, and no more than 2% earnings on their remaining cash balances. That is what CalPers is putting on the table when an agency has to opt out of the system

    This is what your own union bosses did to you. You might want to think about decertifying your current unions, and let them scramble for their own pensions. You are not innocent victims because you alone encouraged your unions to fight, obstruct and sabotage every single attempt to reform this pension trainwreck.

    Your hands are dirty because you continued to elect officials who kept kicking this can down the road, long after it was obvious this was never going to be a sustainable pension plan.

  3. Boldguy says:

    Wow talk about shutting the barn door after all the animals have all left!!!
    Governor Moonbeam caused most of these problems during his first stint as Governor.
    Nothing will be done until pensions costs cause a financial collapse and or bankruptcy of government agencies through out California. Even the lowered return that is bringing this issue to the fore front is still way exaggerated beyond actual returns. Governor Moonbeam packed the Cal Pers Board with political hacks and crony’s who divested the positive investments for groovy political correct investments!!!
    I think The City of SLO is having a symposium on how to deal with their escalating pension costs, thinking that it will be 20 to 25% of their budget by 2025:(
    This is going to get really bad, if Cal Pers was honest, instead of lowering it from 7.5 to 7% it would be more like 2.5 to 3, they did have good returns this year, but that’s how they got into this mess in the first place, basing a few good years as the formula for future returns and ability to raise pension pay outs, worse than Bernie Madoff!!!
    Google Cal Pers vs City of Loyalton, quite interesting:(

    1. Factz Checkerz says:

      One can measure the breakdown of this state by two critical dates: When Jerry Brown I unionized government workers, and 1999 when Gray Davis handed them the public treasury.

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