CA Supreme Court Rules Pension Benefits Can be Reduced, But Pensions Are Protected

The California Supreme Court ruled Monday that state and local governments may reduce pension costs by repealing certain benefits without running afoul of constitutional protections for public pensions.

In a unanimous decision written by Chief Justice Tani-Cantil Sakauye, the court upheld California’s 2012 repeal of the “air time” benefit that allowed state workers to buy credits toward retirement service.

Unlike pensions, which are a form of deferred compensation, the opportunity to buy retirement credits was not protected by the contract clause of the California Constitution, the court said.

The court said it found no evidence “that the Legislature intended to create contractual rights” when it made the retirement credits benefit available to workers in 2003.

Although the court ruled for the state on the benefit, it refused requests by the state and pension reformers to dilute decades-old legal protections for public-employee protections, the Los Angeles Times reports.

For more than 60 years, California has adhered to a legal rule that guarantees workers the pensions that were in place the day they were hired.

Known as the “California Rule,” the protective legal doctrine has stymied state and local lawmakers wrestling with hundreds of billions of dollars in pension shortfalls.