A major pension decision published by the California Supreme Court on Thursday leaves retirement benefits intact for nearly all public workers in the state.
The case was the second in two years challenging the so-called California rule, the set of legal precedents that has long prevented state and local governments from reducing public pensions without offering new benefits to make up for the losses.
The court’s decision clears from the judicial pipeline any major cases that lawmakers could use to reduce workers’ retirement benefits to try to save money.
The court restricted its decision to specific practices that some county public workers have used to inflate their pensions before retirement, such as figuring bonuses, extra pay for off-hours work and leave balances into their pension calculations.
The Alameda County Deputy Sheriff’s Association filed the lawsuit in 2012 as a challenge to former Gov. Jerry Brown’s Public Employees Pension Reform Act, which banned the so-called pension spiking.
The decision means Alameda deputies hired before 2012 won’t be able to go back to counting those types of pay as pensionable, nor will other public workers in similar situations at the 20 counties that run their own pension systems instead of paying into CalPERS.
Are retiree pensions safe?
The ruling has no impact on retirees, current state workers or the majority of current workers in local governments.
Regarding the California rule, the court suggested saving money isn’t a good enough reason to modify workers’ future pension benefits, even when a worker won’t receive those benefits for decades to come.
Will the ruling help employers cut pensions?
Local government attorneys and experts might be looking for suggestions in the 90-page decision that the California rule has been weakened. Even if they find language they believe diminishes the rule, many things would have to happen — starting with the passage of new local or state laws — before any benefits would be affected.
Even then, it’s unlikely retirees would be affected.
As governments deal with hits to their budgets from the coronavirus, the court’s decision likely will act as a deterrent from looking for savings from pension changes.
And even in bankruptcy, the City of Stockton didn’t reduce pension benefits. City leaders decided they had to keep the benefits to remain competitive in hiring public safety workers.
Wes Venteicher anchors The Bee’s popular State Worker coverage in the newspaper’s Capitol Bureau. He covers taxes, pensions, unions, state spending and California government. A Montana native, he reported on health care and politics in Chicago and Pittsburgh before joining The Bee in 2018.
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