Sacramento Pension Spin

David Crane
Lecturer and Research Scholar at Stanford University and President of Govern for California

When I started focusing on California pension matters in 2005 I quickly learned that Sacramento is a company town. The company is government and in place of shareholders are government employees who spin financial and legal fictions about pensions to journalists living inside the same beltway. Journalists at that time generally bought the spin but their skepticism has improved since then. Still, old habits die hard, as illustrated yesterday when a Sacramento journalist parroted government employee spin that a recent California Supreme Court decision prohibited cuts in future pension benefits. The decision did no such thing.

The Alameda decision upheld a reform enacted in 2012 that prohibited pension spiking. It did not address reductions in future benefits and in the opinion of our legal advisors the court left itself plenty of room to do so in a future case. In our view, that future case will arise only after enactment of a pension reform reducing future benefits. State legislators will have to enact such a reform to stop the destruction of public services being caused by exploding pension costs. The sooner they act, the better for residents.

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