SAN FRANCISCO – California
public employees recently learned they might have to reconsider how they handle
their retirement after the 1st District Court of Appeal ruled that the legislature can
trim public employee retirement benefits for anyone who’s still on the job.
which was unanimous, halted assumptions that employees’ benefits are
untouchable once they start their job. The legislature justification was as
long as the employee still received a “reasonable” pension, their rights
weren’t being violated.
“My sense is
the court didn’t intend to or view this as a ruling against employees, I think
they just ruled on the law,” Stanford Professor of the Practice of Public
Policy Joe Nation told the Northern California Record. “Of course, the conclusion of the court was that the
pension had to be reasonable, but that doesn’t mean that it’s exactly what you
are guaranteed on Day One. What this does is get this close to what things are
like in the private sector.”
reason for this ruling is because the current system has left the state and its
taxpayers with hundreds of billions of dollars of debt. The appellate court
called the situation “the alarming state of unfunded public pension
liabilities,” according to the East Bay Times.
debt situation, there’s a good chance state employees and their union attorneys
will appeal the ruling all the way to the U.S. Supreme Court if
necessary, according to Nation.
(of an appeal) is 100 percent; no doubt,” Nation said. “The question is what
the legal strategy will be. I think what they’ll possibly do is point to
previous court rulings and they would point to the support for the ‘California
Rule’ and argue this court overstepped its bounds and therefore the Supreme
Court has to overturn this or send it back to the court of appeal.”
Of course an
appeal doesn’t guarantee an overturn of the original ruling. However, whether
the ruling holds or not, public employees are going to be forced to reevaluate
their retirement plans, given they could be reduced at any time.
“If I were
in that position and whether I thought this ruling would stand or not, I think
would look at the math,” Nation says. “I would look at the numbers and conclude
like anyone out there who has looked objectively at the numbers and conclude
that this is a house of cards. This is at some point, going to collapse; the
question is how is it going to collapse and who is going to get hurt?
think I’d want to be my retirement on hoping things stay the same,” Nation said. "I’d rather go to my union leadership and say, ‘Wait a minute, are you
really acting on my best behalf by stonewalling and refusing to having an
honest and open discussion about what we know is likely to happen?’”
employees aren’t the only ones who may want to take a look at their retirement
situation. California’s pension debt is close to $1 trillion; a number that
would take eight states' budgets set aside to fund, according to Nation. Nation is the project director at Stanford for pensiontracker.org, which tracks the financial states of California Public Employees' Retirement System. The big question is where things go from here.
of California isn’t going to say, ‘We’re not going to fund schools, welfare and
parks, we’re just going to give it all for pensions,’” Nation says. “It’s not
going to happen. Change is coming; the question is what form it takes. We’re
far better off and employees are better off to deal with it now than to let
this thing fester and then have it be much worse in the end.”