By Adam Ashton
January 12, 2018 12:25 PM
Gov. Jerry Brown this week predicted that his 2012 pension law will survive union challenges in court and blow a hole in the so-called “California rule” that has restricted changes to public employee retirement plans for half a century.
“When the next recession comes around, the governor will have the option of considering pension cutbacks for the first time in a long time,” Brown said at a news conference this week where he unveiled his 2018-19 budget plan.
Brown has been working to strike out the California rule, a precedent dating back to the 1950s that holds public agencies cannot reduce pension promises without offering workers new incentives to offset the loss of retirement income.
His office in November replaced the attorney general’s office in defending his pension law against a challenge filed by the state firefighter union. The union argues that the pension law denied benefits to employees who were promised them, including the ability to purchase “air time” that they could use to enhance their pensions upon retirement.
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It’s one of several high profile pension lawsuits that are expected to appear before the state Supreme Court this year.
Those cases have collected a cluster of appeals court rulings that have questioned the California rule. One said public workers are “entitled only to a ‘reasonable’ pension, not one providing fixed or definite benefits immune from modification.”
Brown cited that ruling when he spoke to reporters this week.
“There is a lot more flexibility than is currently assumed by those who discuss the California rule,” Brown said. “At the next downturn when things look pretty dire, (pensions) will be on the chopping block.”
The worst-case scenario for public employees would be a reduction in the rate they accrue their pensions, say advocates who want to limit the state’s pension liabilities. Potential changes would not affect pensions that current retirees already receive, unless a government agency goes bankrupt and stops paying its bills.
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