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.
Bill Gram-Reefer is Editor & Publisher of Halfway To Concord, founded in 2004. Halfway To Concord is the leading online source for community-driven political news, events, and opinion for Contra Costa County and the San Francisco East Bay.
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@Kris
I guess what I do not understand is the equation that seems to be getting put out there that if there is pension reform for govt workers, that somehow it will mean that the entire middle class has been irreparably wounded.
The facts suggest that there certainly will be no middle class IF the rest of us are forced to pay the pensions as they are right now – so this argument seems like a red herring and to be somewhat disingenuous.
Do not understand your comment. But it is true that if the excessive pension deals are not brought under control AND the unrealistic earnings forecast by pension plans are not reduced, the public (and the public employees) are in deep financial trouble.
Keep in mind that it is the elected officials and those on the pension boards like CalPERS are ultimately the ones to hold accountable, not the union members.
The unions say that pensions are really deferred comp. If so, that means the unfunded or UAAL portion of them are part of compensation.
That means the UAAL should be on the negotiating table as part of the total comp picture – i.e. it should be legally negotiable.
I like your thoughts. Every raise generates a larger future pension cost and should be included when you talk about the real cost of a raise.
Good summary of California’s plight — acknowledged by those from both ends of the political spectrum — from Daniel Henninger in today’s WSJ:
http://online.wsj.com/article/SB10001424052748703712504576232823900459098.html
I retire in 3.5 years after a 30 year career as a police officer. I will make 90% of my pay which will equal 78k per year. My wife a court employee with 30 years will have a pension of 25k. I put hundreds of people away as a homicide and child sex crimes investigator and was shot twice. We have no guilt in collecting our pensions.
Management in Long Beach has taken a clear stand:
http://www.publicceo.com/index.php/local-governments/151-local-governments-publicceo-exclusive/2540-a-councilmember-explains-why-long-beach-declared-an-impasse
@Brian:
Hey, I wasn’t name-calling . . . just quoting the title of an article! Don’t shoot the messenger, please!
Court Ruling allows Richmond (and other municipalities) to make layoffs without consulting unions
Looks like pension funds are not the only retirement funds that are in trouble….let me guess, Wendy is now going to call retired citizens on social securty \Welfare Queens\….nice