California Supreme Court Upholds Airtime Elimination, Sidesteps “California Rule”
March 7, 2019
The California Supreme Court issued a long-awaited decision in Cal Fire Local 2881 v. CalPERS, one of several cases surrounding vested pension rights and the California Rule, the legal precedent that requires public employers to compensate their employees if they reduce retirement benefits. However, in this particular case, the court bypassed the California Rule and issued a narrower ruling focused specifically on a provision in the Public Employees’ Pension Reform Act (PEPRA) which eliminated the option for employees to purchase service credits (commonly known as “airtime”).
The California Supreme Court unanimously held that airtime was not a vested pension benefit, thus validating the status quo under PEPRA. In reaching its decision, the court punted the much bigger question of whether the California Rule for modifying pension benefits should remain intact. They argue that since airtime is not vested, there is no reason to address the California Rule in the Cal Fire case.
However, counties should continue to keep this issue on their radar since there are several other cases waiting in the wings that could potentially cause the courts to reopen the California Rule. They include Marin Association of Public Employees v. Marin County Employees’ Retirement Association, Alameda County Deputy Sheriff’s Association v. Alameda County Employees’ Retirement Association, and Hipsher v. Los Angeles County Employees Retirement Association.
CSAC will be closely monitoring these cases and will keep counties apprised of their status. For additional details on the Cal Fire case, counties can access the court’s opinion online.