An Initiative is the Way to Bring Sense to the “California Rule”

Joel Fox
Editor and Co-Publisher of Fox and Hounds Daily

I guess this is what the initiative process was made for. While officials won’t act on major pension reforms and the court doesn’t engage on the basic issue dealing with the public employee pension structure, which is putting immense pressure on local government budgets, an initiative may be necessary to bring sense to the “California Rule.”

By now you know the California Supreme Court made a narrow decision in the Cal Fire Local 2881 v. California Public Employees’ Retirement System. The court focused on the issue immediately before it, dealing with whether particular benefits such as buying years to inflate work time on which pension benefits are calculated are vested rights and prohibiting them is a violation of the state constitution. The court said no.

But the court stayed away from the California Rule created by a lower court decision 60 years ago that essentially says benefits given to a public employee at the time of being hired cannot be reduced unless an equal compensation is granted.

As pension and health care costs for employees continue to grow so that they crowd out spending on other government responsibilities, major efforts to rein in the growth are thwarted by the California Rule.

Those who want to change the rule do not want to unmercifully reduce pensions or take away pension dollars already earned by workers. They would like to see legislative bodies have the ability to reduce future benefits that have yet to be earned.

Meanwhile, numerous tax increases are popping up all around the state. While the taxes are supposedly dedicated for funding civic services much of the tax is to deal with the growing pension section of the budgets.

The Supreme Court still may take the opportunity to act on this issue given other pension cases in the pipeline, but it is a problem the court missed an opportunity to address.

California voters, to get around a recalcitrant government, accepted the initiative process as an avenue to create reforms. Polling tells us the initiative process is widely approved by today’s voters in the Golden State, so a potential road to set reasonable and sustainable public employee pensions might be via an initiative.

It won’t be easy. Public unions will fight reform of the California Rule with all they have. And they have plenty.

However, voters in San Jose and San Diego have shown they support pension reform when local reforms were presented to them. Leaders of those efforts, former San Jose mayor Chuck Reed who runs the Retirement Security Initiative, and former San Diego city councilman Carl DeMaio of Reform California are still working on plans to improve the state pension system, which could result in an initiative.

While there are still pension cases on the way to the Supreme Court, patience may dictate a wait-and-see attitude. But if the pressure builds on state and local budgets and on taxpayers who will be asked to dig deeper into their pockets to fund public retirement systems while trying to have enough left over for their own retirements, don’t be surprised if crusaders consider an initiative the best way to reform the California Rule.

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