Earlier this week, the California Supreme Court issued a major decision in a case regarding public pension benefits in the Golden State. Ruling in the case Cal Fire Local 2881 v. CalPERS, the court unanimously agreed to uphold the California Rule, while also upholding part of a 2012 law that modified pension benefits in the state. This case is a significant victory for public employees and retirees in California because it means their core pension benefits will continue to be protected.
The California Rule is a longstanding precedent of the state court which says that public pension benefits cannot be diminished unless they are replaced by a comparable benefit. The court established this precedent by following the contract clause of the constitution. The court has determined that public employees enter a contract with the state the day they begin their employment and their contractual rights are constitutionally protected. This includes the right to their pension benefits which they begin to earn the day they start working for the state or another public entity. The California Rule was first established in the case Allen V. City of Long Beach in 1955 and has been upheld in numerous other cases in the years since.
The Cal Fire case was one of the first cases in years to seriously test the California Rule. When former governor Jerry Brown pushed through his pension law in 2012, that law included a provision that eliminated the ability of public employees to purchase additional years of service credit. The question in the case was whether that provision violated the constitutionally-protected contractual rights of public employees. The court unanimously ruled that that provision did not violate the constitutional protections, but also held that the California Rule still protects what it deemed “core pension rights.”
Many anti-pension ideologues had hoped the California Supreme Court would use the Cal Fire case to overturn the precedent of the California Rule or at least weaken it. This would have weakened the protection of public pension benefits in the state and opened the door to the gutting of pension benefits. These ideologues were disappointed and reacted with predictable bombast. Carl DeMaio, a former San Diego city councilman who has failed repeatedly to place a pension-gutting ballot measure on the California ballot, offered the same tired, old, “sky-is-falling” rhetoric about public pensions.
Don’t underestimate the importance of the Cal Fire ruling. While the California Supreme Court showed that minor alterations to pension benefits are constitutionally permissible, they also upheld the protections of the California Rule and gave no indication that they would seek to weaken it in future rulings. This means the ability of California public employees to retire with dignity and secure is safe for now.