Should the Supreme Court reduce or alter pension benefits for California public employees?

SAN FRANCISCO - JANUARY 22: A woman walks into the State of California Earl Warren building January 22, 2007 in San Francisco, California. The U.S. Supreme court threw out California's sentencing law on Monday, a decision that could reduce sentences for thousands of inmates in the California State correctional facilities. (Photo by Justin Sullivan/Getty Images)

The state Supreme Court will hear oral arguments Wednesday in Los Angeles to decide on whether it should reduce or alter some pension benefits for California public employees.

In 2012, Gov. Jerry Brown signed into law the Public Employee Pension Reform Act (AB 340) that restricts pension benefits for public employees hired after 2013. Cal Fire Local 2881, the union that represents Cal Fire firefighters, filed a lawsuit challenging Brown’s decision. The fire union says this provision violated the “California rule,” a legal theory arising out of a 1955 state Supreme Court ruling that holds that the pensions in place on the day a public employee is hired can never be reduced even for years not yet worked. Brown said that he anticipates the courts will void the “California rule” and enable future leaders to adjust pension benefits.

The governor argues that his reform act will increase the retirement age and save billions of taxpayer dollars by capping employees’ benefits. A win for Brown would put a dent in the so-called “California rule.” The fire union’s lawsuit seeks to undo only a part of the pension reform law. It aims to restore a benefit the law canceled that had allowed public employees to buy “airtime,” which is extra years of service that were credited to their pensions. If the court finds that “airtime” is a vested right, the court could modify the “California rule” that prevents cuts in the pensions of current workers.

We have reached out to Cal Fire Local 2881, the union that filed a lawsuit challenging Brown’s decision, but they declined our request for an interview.

Guests:

Amy B. Monahan, professor of law at the University of Minnesota Law School, who has written about the “California Rule” and its impact on public pension reform; her focus includes federal taxation and employee benefits law

Terry Brennand, director of revenue, budget, and pensions at Service Employees International Union (SEIU) a labor union representing 700,000 workers in various occupations in California and a member of Californians for Retirement Security, a coalition of more than 1.6 million Californians representing public employees and retirees.

Dan Pellissier, president of California Pension Reform, an advocacy group that that wants to reduce California pension obligations for public employees and retirees.