This past week, PRI filed an amicus brief in the California Supreme Court on the closely watched case Cal Fire v. CalPERS and the State of California.
In 2012, the legislature passed, and Governor Brown signed into law, the Public Employees’ Pension Reform Act, or PEPRA, intended to help rein in the state’s spiraling pension costs. Among the reforms enacted by PEPRA was an end to the practice of “air time”, which allowed state employees to purchase up to five fake years of public service in order to substantially increase their pension benefits (I know, I know, it really is hard to believe). While the fee to buy these extra years was in theory supposed to be high enough to eventually cover the larger pension payouts, the actual math shows that it cost taxpayers millions of dollars when investment returns fall short of forecast.
If fighting to restore this brazen practice isn’t astonishing enough, there are even bigger stakes for the unions in Cal Fire. In another “hard to believe” fact, decades of court rulings have suggested that pension benefits for California workers can’t ever be reduced. Known as the “California Rule” – once higher benefit formulas are established, workers are thought to be permanently entitled to them. The legislature can’t do anything about it, even in the interest of good public policy, because the unions are arguing that it’s a “contract.”
Now, how many of us have longed for a few old laws where we were better off? I, for one, am nostalgic for the old IRA rules when anyone can deduct an IRA no matter their income level. In 1986, Congress eliminated the universal deductibility of IRA, and after a few years of raises, I lost my deduction. But it would be laughable to think that I could take the federal government to court to stop it from cutting me out of my favorite retirement savings vehicle. Just as I don’t have a permanent claim on the government for tax relief, the unions don’t have a permanent claim on taxpayer dollars. It’s not only absurd, it’s unconstitutional. The U.S. Constitution gives only Congress the power of the purse, not the courts, not the executive branch, and certainly not public unions.