A Folsom law firm has posted an opinion paper that analyzes whether California Government Employers can reduce benefit plan costs, concluding there is more latitude than commonly perceived. “A close reading of the pertinent cases suggests that a public employee’s right to a pension benefit is not inviolate, but may be changed or even eliminated under appropriate circumstances.”
Citing Kern, Allen, Wallace, and Packer, the paper concludes, “there are now a number of judicial precedents for making reductions in the terms and conditions of employment even when the reductions cannot be agreed upon as part of the collective bargaining process.”
First of all, while Governments have the flexibility to place new employees in a separate, less expensive plan, they also have legal ways to redesign plans to avoid and discourage pension spiking, including changing plan formulas and compensation definitions that make it possible as in Contra Costa County.
While employees may have vested contractual rights to a pension, that right is not rigidly fixed but subject to changes and modifications. There is no right to a “defined benefit” but to a substantial or a reasonable pension. There is nothing inconsistent with upholding that right to a pension and making modification to terms and conditions.
Local governments in California only need the spine to stand up to their masters, the public employee unions.