California judge rules public employees have vested rights to pensions
December 24, 2013
A California judge ruled Monday that employees of the city of San Jose have vested rights to their pension benefits. [Mercury News]
Santa Clara County Superior Court Judge Patricia Lucas struck down part of a 2012 pension reform measure that required existing city employees to contribute more to their retirement benefits.
Measure B, which 70 percent of San Jose voters approved in June 2012, mandated that existing employees pay 16 percent more toward their pensions to help reduce the more than $3 billion in unfunded liabilities accumulated in the plans.
Lucas ruled that the city of San Jose had long held itself responsible for the unfunded liabilities, thus creating a vested right for employees to have the city close the funding gap.
Lucas, however, upheld a section of the initiative that allows the city to reduce pension costs through salary cuts.
“It would be much better if we could deal directly with skyrocketing costs, but there are limited things we can do,” said Mayor Chuck Reed, a backer of the ballot measure. “The judge said all you can do is cut their pay.”
Reed still argued that the ruling was a victory for the city, and that over the coming months, officials will be able to make $68 million a year in pay cuts.
Union leader also claimed victory following Lucas’s ruling.
“Her decision affirms what we’ve been saying all along: the city cannot break its promises to its employees and its retirees,” said Ben Field of the South Bay Labor Council.
In 2011, San Luis Obispo voters, too, passed a pension reform initiative with more than 70 percent majority.
Following the passage of Measure A, San Luis Obispo labor groups also accepted agreements with the city that require employee contributions to pensions.