The new secretary of labor has come out in favor of collective bargaining at the expense of a state's efforts to control its pension costs.
U.S. Secretary of Labor Thomas Perez and California officials are clashing over provisions in the state's 2012 public pension reform law. If state officials stand by the pension reform, California could lose more than $1.5 billion in federal funding for public transit this year alone.
The Labor Department had given the state until Aug. 16 to back down. But on that day, both sides reported they were still negotiating, although they didn't specify a new deadline.
Mr. Perez inherited a fight that began after California passed the Public Employees' Pension Reform Act last September, which, among other things, raised pension contributions for existing state, local and transit district employees, while boosting the retirement age for new employees and decreasing their benefits.
In an effort to exempt their members from the changes, leaders of unions representing California's public transit workers protested under a provision in the Federal Transit Act that allows the Department of Labor to hold up federal transit funding if they find collective bargaining rights are impeded. Officials at the Amalgamated Transit Union and the International Brotherhood of Teamsters argued California's pension law impeded those rights. At least 15 transit districts are affected by the funding dispute, including the Los Angeles County, Metropolitan Transportation Authority, which runs one of the largest public transit systems in the country.
The protest prompted then-Acting Secretary of Labor Seth Harris in November to hold up release of $1.6 billion in federal transit funds for California, until the state could prove the transit workers' collective bargaining rights were protected when the pension reforms took effect.
Several attempts at negotiating a resolution failed. Mr. Perez, who took over as labor secretary in mid-July, wrote to Gov. Edmund G. “Jerry” Brown Jr. Aug. 1, saying the DOL “appreciates the fiscal challenges faced by California, including the solvency of the state's public pension system.” But, he added, “We are concerned that PEPRA diminishes both the substantive rights of transit employees under current collective bargaining agreements and narrows the future scope of collective bargaining over pensions.”