Thursday, December 1, 2016

SF Chronicle: California’s top court should uphold pension reform

California’s top court should uphold pension reform

California’s top court has agreed to issue the last word on a ruling that would give state and local governments new powers to cut public employee pensions.

The state Supreme Court’s final decision will have reverberations on local government budgets for decades. It will also influence other cash-strapped states, many of whom are closely watching the case.

The case stems from a 2012 pension reform law that slashed pensions and raised retirement ages for new employees, while banning “pension spiking” for existing workers.

Pension spiking is an odious practice by which some workers inflate their pay just before retirement, making them eligible for larger pensions.

With an estimated $500 billion-plus shortfall in pensions for state employees, teachers and UC workers, pension spiking is a practice that’s truly impossible to justify.

That’s what a three-judge panel of the First District Court of Appeal decided in August, with a ruling that said the state Legislature can alter pension formulas for active employees and reduce their anticipated benefits.

“While a public employee does have a ‘vested right’ to a pension, that right is only to a ‘reasonable’ pension — not an immutable entitlement to the most optimal formula of calculating the pension,” wrote Justice James A. Richman in the appeals court opinion.

While we agree with the appeals court’s ruling — and with the 2012 pension reform law — we also agree that the state Supreme Court should issue a final judgment.

This is a crucial decision that will have an enormous impact on government budgets for the foreseeable future.

It will help governments around the state decide how many public services they can continue to provide citizens in the years to come.

Many local governments have aging workforces, and the bill for pensions is only going to grow larger and larger with time. This is what the Legislature was considering when it passed the reform law in 2012: the ability of governments to provide for current and future citizens.

While the unions in opposition have tried to make the case about the status of pension benefits in general, the case is specific. The state wants to curb an abusive current practice, not avoid its responsibility to provide state and local workers with a reasonable retirement. It has a responsibility to public employees, but it also has a responsibility to California residents.

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