California Public Employee Pension Reform

It is in the news, as this story yesterday from the Sacramento Bee notes but the best story is this article in City Journal which notes pension reform appears to be a game only the government seems to win.

An excerpt from the City Journal article

“Certainly the game is rigged,” science fiction author Robert Heinlein once wrote. “Don’t let that stop you; if you don’t bet you can’t win.” The quip should be the new rallying cry of California’s indefatigable band of pension reformers, who continue to fight to rein in the state’s pension debt. It’s always been a tough battle—but the latest setback shows that the system is rigged at practically every level. Last month, California’s Public Employment Relations Board (PERB), the quasi-judicial body that oversees the implementation of the state’s collective-bargaining statutes, invalidated the results of a three-year-old referendum—Proposition B—that passed in November 2012 with 66 percent of the vote and would have reduced pension benefits for most new hires in San Diego and moved them to a 401k-style, defined-contribution system. Other reforms have also fallen by the wayside. In June 2012, heavily Democratic San Jose approved with nearly 70 percent of the vote a measure that would have trimmed benefits for current employees. A Santa Clara County judge in 2014 eviscerated the measure, invoking the so-called “California Rule,” a 70-year-old court interpretation of the state constitution that has made it impossible for overburdened cities to trim employee costs.

San Diego’s reform initiative was qualitatively different from San Jose’s. Its authors were careful to craft language that avoided running afoul of the California Rule by focusing on new hires and placing caps on pensionable pay. Prop. B was touted as a model for the rest of the state to follow, and the state needs one. The union-controlled legislature remains hostile to reform, beyond the expedient passage in 2012 of a pension-reform bill that mainly served as a bait-and-switch to convince voters to hike taxes.

PERB is not an impartial agency. Before the 2012 city vote, PERB had tried to keep the proposition off the ballot altogether. Most of the board’s members have worked for one of two big unions—either the California Teachers Association or the Service Employees International Union. Its administrative law judges aren’t real judges but officials employed by the agency. Nearly two years ago, one of those biased adjudicators issued a lengthy ruling demanding that San Diego return to the 2012 status quo. The full board affirmed the ruling, maintaining that officials were required to bargain the terms of the initiative with the city’s unions before placing the measure on the ballot. But the city didn’t place the measure before voters—voters did it themselves, signing petitions to place it on the ballot. The board elided this vital distinction by pointing to the participation of San Diego’s former mayor, Jerry Sanders, and other officials in the initiative’s campaign. Never mind that Sanders said he was involved as a private citizen.

On Tuesday, the City Council voted unanimously to appeal the measure, even though a leading Democrat said he voted for the appeal simply to get legal clarity. “The people’s right to initiative is guaranteed by the California Constitution,” City Attorney Jan Goldsmith told the Union-Tribune. “This right cannot be bargained away in a back room, or stolen from the people by a government agency.” The appeal will send the matter to the courts.

 

About David H Lukenbill

I am a native of Sacramento, as are my wife and daughter. I am a consultant to nonprofit organizations, and have a Bachelor of Science degree in Organizational Behavior and a Master of Public Administration degree, both from the University of San Francisco. We live along the American River with two cats and all the wild critters we can feed. I am the founding president of the American River Parkway Preservation Society and currently serve as the CFO and Senior Policy Director. I also volunteer as the President of The Lampstand Foundation, a nonprofit organization I founded in 2003.
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