Gov. Jerry Brown’s aides will meet today to devise a response to the California Public Employees’ Retirement System board decision that dealt the governor one of his worst losses of this term. Options aren’t great.
By a 7-5 vote, the CalPERS board Wednesday watered down the Public Employee Pension Reform Act of 2012, a law that Brown had called a “sweeping bipartisan pension reform.”
Much of the law remains intact. But CalPERS’ action will likely lead to more pension spiking. The vote also made clear a truism about legislation: Entities that interpret the laws have final say about how much sweeping any reform accomplishes.
Over the years, unions have negotiated nearly 100 pay sweeteners in contracts with local governments. Like public employees hired before the new law, cops hired since 2013 can get pay and now pension bonuses for being good shots; librarians can get a bump for helping patrons find reference material; clerks who type fast, laborers who do finishing touches on concrete all can get bumps.
The CalPERS board agreed these roles should count toward pensions, and Brown didn’t object to those specifics. But he did urge the board to declare that extra pay given to newly hired workers for temporary promotions or duties should not be counted toward pensions. If those pay bumps or promotions became permanent, then the pension could be increased. But Brown lost.
“Today CalPERS got it wrong,” Brown said in a statement.
The administration could sue, though any suit would take years to resolve. Brown could use his rule-making power to soften the decision. But organized labor, which supported CalPERS’ action, could sue to enforce CalPERS’ interpretation.
The governor could call the Legislature into a special session and urge lawmakers to approve a new pension bill. Democrats who control the Legislature probably have more pressing concerns. Many of them wouldn’t want to alienate public employee unions, a source of campaign money and workers, in the months before the November election. Still, a legislative fix probably is the only real hope.
Upon signing the bill in September 2012, Brown issued a news release bragging that the new law “bans abusive practices used to enhance pension payouts.”
The legislation, he said then, would end abuses in a variety of ways – including by requiring “three-year final compensation to stop spiking for all new employees,” and calculating “benefits based on regular, recurring pay to stop spiking for all new employees.”
CalPERS shared that view in 2012. That was then. Somehow, the board had a change of heart.
Rosanna Westmoreland, CalPERS’ external communications manager, said in an email Thursday that staff “since that time completed many hours of additional analysis, including engaging stakeholders to provide input. ... The resulting recommendation is consistent with the law as written.”
Perhaps the governor needs to take another shot at legislation overhauling pensions. After all, he might be the most popular public employee in the state. If he can fix clearly flawed interpretation of the law, he probably deserves to be.