California Supreme Court Poised to Decide on Vested Pension Rights
The California Supreme Court heard oral argument last week on a controversial case dealing with pension benefits for government workers. The case, Cal Fire Local 2881 v. California Public Employees’ Retirement System (CalPERS), challenges a provision in the Public Employees’ Pension Reform Act (PEPRA) that eliminated the option for employees to purchase service credits (also known as “airtime”). This issue is highly significant for local agencies since it could potentially affect future pension liabilities and collective bargaining agreements.
Most importantly, the State Supreme Court has an opportunity to reconsider the “California rule,” which is a legal precedent that requires public employers to compensate their employees if they reduce retirement benefits. However, there is also a chance the Court decides the case on narrower grounds, specific to airtime and whether it is a “vested” pension benefit. Either way, counties should expect a decision within the next three months.
If the Court makes a narrow ruling on the Cal Fire case, there are four other cases pending on the docket that implicate the California rule. Three of those cases are being placed on hold pending the outcome of the Cal Fire case. The one remaining case – Alameda County Deputy Sheriff’s Association v. Alameda County Employees’ Retirement Association – is fully briefed and can be set for oral argument at any point.
CSAC will continue to monitor these cases and will provide further updates as they become available. In the meantime, please direct any questions to CSAC legislative staff, Dorothy Johnson or Tracy Sullivan.