Calif. Gov. Brown Takes on Pension Reform

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California Governor Jerry Brown is garnering significant praise this week with the filing of a brief, which aims to tackle the state’s massive pension debt. As Brown prepares to leave office, the filing targets the so-called ‘California Rule,’ which bars state and local governments from modifying pension benefits. According to the Sacramento Bee, “The filing embraces a cluster of recent court decisions that hold public employees are entitled to reasonable pensions, but not necessarily ones that are calculated on the most favorable formulas for them.” Brown’s office is specifically taking on ‘air time,’ an option that allows public workers to purchase extra years of service that are credited to their pensions, which, according to Brown, is an “unworkable and fiscally irresponsible scheme.” 

More from the Sac Bee: “Before Brown’s [2012] pension reform law took effect, California public employees could buy up to five years of service credit through the air time offerings. Participating in the program cost workers tens of thousands of dollars up front, but gave them a higher pension when they reached retirement age.”

While recent lower-court decisions have supported Brown’s 2012 pension reforms on air time and pension spiking, the challenges are now in front of the California Supreme Court — a decision that could have significant implications not only in the state, but throughout the country.

The San Francisco Chronicle’s editorial board today called Brown’s filing a “notable decision,” further saying “The governor deserves praise for taking on a financial issue that’s the equal of his dreams of a new plumbing system for California water or a quick-shot train line connecting the north and south. Whether it’s his short-timer status or tightwad reputation, he’s focusing on a major problem. The state’s two main pension pots are hundreds of billions short of promised payments to retirees while cities and counties are facing steeper costs to keep the game afloat.”

For nearly two decades, California’s public pension debt has been spiraling out of control, eating up tax dollars and public services. Both the California Public Employees’ Retirement System and the California State Teachers’ Retirement System–with more than a combined $200 billion debt–only have approximately two-thirds of the assets needed to pay the debts they owe.