How Flexible Is the California Rule Protecting Public Pensions?

Commentary

How Flexible Is the California Rule Protecting Public Pensions?

Sasha Volokh has a new article on Reason.org analyzing a recent California appellate court ruling that upheld the state’s 2013 PEPRA law’s provisions limiting the practice of pension spiking, an interesting development given the “California Rule,” a constitutional doctrine that has obstructed pension reform in the Golden State since 1955. Here’s an excerpt:

California is notorious for having a constitutional doctrine that is highly protective—some would say overprotective—of public-employee pensions. The “California Rule,” which has spread to several other states (see this May 2016 post), has stood as an obstacle to public-employee pension reform for over half a century. (See my July 2014 policy study on the California rule.)

Seeking at least some relief from rising pension costs, the California Legislature passed a statute in 2013 limiting the practice of “pension spiking,” by which government bodies allow public employees to artificially inflate their ending compensation in order to increase those employees’ pensions. And this statute was recently upheld in an August 2016 ruling by a California appellate court in Marin Ass’n of Public Employees v. Marin County Employees’ Retirement Ass’n. If the California Supreme Court upholds this decision, it could ease the state’s pension woes to a certain extent. But the Court of Appeal’s reasoning is questionable and rests on a strained reading of past California cases. It wouldn’t be surprising if the Supreme Court eventually reversed this decision.

Read the full article here. Volokh’s other legal analyses written for Reason Foundation are available here.

Leonard Gilroy is Senior Managing Director of the Pension Integrity Project at Reason Foundation, a nonprofit think tank advancing free minds and free markets. The Pension Integrity Project assists policymakers and other stakeholders in designing, analyzing and implementing public sector pension reforms.