Update written by Chris Brewster on Proposition B and Court Case:  This is the Long Version

The Shorter version was published in the Union Tribune and follows this version.

As a local retiree, you might wonder, why do the Union-Tribune Editors have such difficulty accepting court rulings when it comes to pensions? Our system of justice gives the Legislature the authority to craft laws, the Governor the authority to approve (or not), and the Judiciary the role of interpreting the validity and meaning of those laws. Alternatively, the voters, through initiative, can make law; but that too is subject to judicial review.

In 1955, the California Supreme Court determined that the law, with respect to pensions, established that workers enter into a contract with the employer on their first day of work and those contractual rights cannot be diminished (unless the employee agrees). It is now known as the California Rule. It has been recognized law in California for over 70 years. Public employers have thus known that if they offer a pension benefit upon hire, they can’t reduce it at will.

Recently, the California Supreme Court ruled on a separate issue related to pensions—an opportunity offered to State employees to purchase up to five years of additional service credit (ARS) in their pension system at a price intended to be cost neutral to the pension system. Alas, it seems that the employer (the State) priced this incorrectly and the Legislature, with the approval of the Governor, passed legislation which revoked it.

The Supreme Court upheld this revocation as lawful. They said, “We conclude that the opportunity to purchase ARS credit was not a right protected by the contract clause. There is no indication in the statute conferring the opportunity to purchase ARS credit that the Legislature intended to create contractual rights. Further, unlike core pension rights, the opportunity to purchase ARS credit was not granted to public employees as deferred compensation for their work.”

Not surprisingly, the UT Editors lauded this decision. In doing so though, they implored the Supreme Court when considering other pending pension benefit cases to nullify or substantially modify the California Rule, allowing public employers to reduce workers’ retirement benefits mid-career.

Moreover, the Editors said of the long-recognized 1955 ruling, “How was such a sweeping decision made without the explicit approval of the lawmakers elected to represent Californians? That’s not how democracy should work.” But it is, of course, how democracy works. The Editors would presumably welcome an opposite judicial determination without the approval of lawmakers.

The California Rule is by no means unique. According to the National Public Pension Coalition, “A majority of states (34) follow a contract rights approach to public pension benefits.” Moreover, a dozen follow the California Rule more specifically.

Let’s apply this concept of contract law to a contract familiar to homeowners—a mortgage. Imagine that a homeowner enters into a 30-year fixed mortgage contract with a lender and plans a future based on that contract. Would it be fair or legal for the lender, in light of changed economic conditions, to change the interest? Clearly not.

The UT Editors’ profound dislike of pensions has created some serious problems locally. They supported a local 2012 ballot proposition (Proposition B) to eliminate pensions for most newly hired City of San Diego employees and to freeze pay for all employees for five years. When this proposition was challenged as being legally defective, the Editors insisted otherwise.

Recently the Supreme Court unanimously ruled that Proposition B was indeed defective, so remedies are in the works. Since passage of Proposition B though, San Diego has been left hamstrung as the only public employer in California with no pension for new-hires and has had substantial challenges recruiting and retaining employees.

Public employees are servants of the people. We take great pride in the services we provide, whether it be maintenance, recreation, public safety, or any manner of service needed. Is it unreasonable, in exchange, to expect that a promise made is a promise kept?

Signed by:

Jim Baross, President, City of San Diego Retired Employees’ Association San Diego, CA, (888) 730-4935

John J. McTighe, President, Retired Employees of San Diego County El Cajon, CA (619) 688-9229

Tony Hancock, President, City of San Diego Retired Fire and Police Association, San Diego, CA (760) 943-7351

 

Retirees: This article on the Prop B hearing at the Appeals court on March 11, 2019 is from the president’s of  three retiree organizations, published in the Union Tribune.

Joe Flynn, Retiree

Your Opinions | 

In Response: Pension promise must be kept

Re: “State Supreme Court’s blown opportunity” (March 5): In 1955, the California Supreme Court determined that pensions offered to workers upon their hire are a contractual right and cannot be diminished. For the more than 70 years since then, public employers have thus known that if they offer a pension benefit upon hire, they can’t reduce it at will.

Recently, the California Supreme Court ruled the state could revoke an opportunity offered to workers to buy up to five years of service credit in their pension system at a price intended to be cost-neutral. The court upheld this revocation as lawful because it is “not a right protected by the contract clause.”

The U-T editors lauded this decision and encouraged expanding it, saying of the 1955 ruling, “How was such a sweeping decision made without the explicit approval of the lawmakers elected to represent Californians? That’s not how democracy should work.” But it is, of course, how democracy works. The editors would presumably welcome an opposite judicial determination without the approval of lawmakers.

According to the National Public Pension Coalition, “A majority of states (34) follow a contract rights approach to public pension benefits.” Think about a mortgage contract, should the lender be able to adjust the interest mid-contract? Public employees are servants of the people. We take great pride in the services we provide, whether it be maintenance, recreation, public safety or any manner of service needed. Is it unreasonable, in exchange, to expect that a promise made is a promise kept?

John J. McTighe is president of the Retired Employees of San Diego County; 

Jim Baross is president of the City of San Diego Retired Employees’ Association; and

Tony Hancock is president of the City of San Diego Retired Fire and Police Association.