More briefs ask state Supreme Court to weaken 'California Rule' on pensions

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Four more organizations filed amicus briefs that support weakening the pension protections embodied in the so-called 'California Rule' that is being challenged in a case being reviewed by the California Supreme Court.

The organizations filed the friend of the court briefs in Cal Fire Local 2881 v. the California State Employees’ Retirement System and the State of California.

The state’s high court is reviewing two cases that challenge the series of court rulings beginning in 1955 that have been interpreted to mean that pension benefits cannot be reduced unless a comparable benefit is added.

The League of California Cities, an advocacy organization for the state’s cities; Pacific Research Institute, a free market think tank; the City of Pacific Grove; and the Howard Jarvis Taxpayers Association, an anti-tax organization, filed friend of the court briefs last week. The California Business Roundtable filed an amicus brief Feb. 16.

“We commend the organizations that filed briefs in support of the Governor,” said Chuck Reed, former San Jose mayor and chair of the Retirement Security Initiative. “The California Rule was ill-considered, has been inappropriately applied, and it has made necessary modifications of public pension benefits virtually impossible.”

The state’s highest court is considering the case that challenges the state's 2012 Public Employee Pension Reform Act. Gov. Jerry Brown is defending PEPRA in the litigation brought by the public employee unions.

In its brief, the League supported the state’s argument that PEPRA's elimination of the option to purchase “airtime,” which allowed employees to buy extra years of service credited to their pension benefits, did not result in an unconstitutional impairment of contract.

The court should rule that no comparable new advantage must be required for any disadvantage and that an economic emergency is not required to modify prospective benefits, attorney Linda Ross of Renne Sloan Holtzman Sakai LLP wrote in the League’s brief.

“Pension modifications must be permitted where they are prospective, leave a 'substantial and reasonable' pension, and bear a material relation to the theory of a pension system and its successful operation,” Ross wrote.

The League published a study in January warning of increasing fiscal stress placed on cities from pension costs that found cities will have to double the percentage of their general funds dedicated to paying CalPERS over the next seven years.

Public employee unions claim that the right to buy “airtime” is protected from change by the California Rule even though it was not created as part of a contractual agreement, the Roundtable’s attorneys argued in their brief.

The Howard Jarvis association’s brief provides a history of decisions that factor into the California Rule.

“The time has come to clarify that the union’s conception of the “California Rule” is wrong,” Bradley Benbrook of Benbrook Law Group wrote for the HJTA. “The state and its municipalities desperately need to engage in further pension reform without the cloud of uncertainty, not to mention the cost of litigation, arising from the pervasive misconception of the law.”

The high court agreed to hear the Cal Fire case and the Marin Association of Public Employees v. Marin County Employees’ Retirement Association in 2016. It is expected to rule this year.

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