Pension battles shift from ballots to courts

Tracking the latest strategies that attack public employee pensions

For years, people have been trying to attack pensions with ballot propositions, said Doug Orr, an economics professor at City College of San Francisco and the chair of the of the CFT Retirement Policy Committee. Those propositions always go down in defeat, Orr said, and now those attacks on pensions are coming to the courts.

CFT legal counsel Robert Bezemek outlined the legal challenges, joining Orr in a workshop on pension activism at the CFT Convention. Bezemek started with the good news — how hard it is to take benefits away from people who have already retired.

“The burden of proof rests with the employer and it’s a really high bar they have to meet. If they claim there’s a fiscal crisis, for example, that isn’t enough by itself — they have to prove a serious fiscal necessity,” he said. “They also have to show what they planned and how it worked for the benefit of individual retirees.”

But a recent decision heading to the California Supreme Court, Marin Association of Public Employees v. Marin County Employees Retirement Association, causes grave concern, says Bezemek. Called MCERA, it threw out 75 years of precedent that said for employees with vested rights any disadvantages in changes to retirement benefits had to be balanced with comparable advantages. This was something that “shall” be done. MCERA, found that “shall” actually meant “may,” meaning that balancing was optional.

This means that retiree benefits for educators — as well as their health benefits — hang in the balance, Bezemek said, as a decision upholding MCERA could allow CalSTRS or CalPERS to make serious adverse changes to teacher and classified employee retirement benefits.

Orr called this the single most important attack on pensions in decades — maybe ever. Orr talked a little about the history of pensions, and how they were first created for the railroads as a way to tie workers to a firm. Pensions were pay as you go, but in the 1960s due to corporations going bankrupt and being unable to pay their workers, Congress passed a law in 1974 that created pre-funding of pensions. This same principle has been applied to public sector workers even though it’s extremely unlikely school or college districts will go bankrupt.

“People say the sky is falling and we gotta get rid of pensions,” Orr said. “You have to counter that the sky is not falling, and it’s not a problem.”

— By Emily Wilson, CFT Reporter