All eyes are on the California Supreme Court as it works through cases that could determine whether the California rule, which stemmed from a series of state court decisions that have influenced the calculation of public pension benefits in nearly a dozen other states, will stand.
The California Supreme Court on March 5 issued a narrow decision on the first of a string of pension reform cases concerning whether the state Legislature can change public employee pension benefits. However, another case now before it that has yet to be scheduled for oral arguments could result in a decision on the rule's continued existence. The so-called California rule states that when the Legislature takes away a vested pension right from an employee, it must exchange it for something of comparable value.
In the recently decided case, the union representing some California firefighters brought the lawsuit after the passage of a 2012 pension reform law that had been championed by former California Gov. Edmund G. "Jerry" Brown Jr.
Before the pension reform law passed, California state firefighters' retirement benefits included the option to buy up to five years of additional service time, called airtime, in order to count those added years toward their earned retirement allowances.
The California cases have been watched closely across the U.S. because most states protect the vested pension benefits of public-sector workers from impairment.
In Cal Fire Local 2881 vs. California Public Employees' Retirement System, the firefighters argued that taking away airtime violated the California rule because the Legislature had not granted public employees anything of comparable value. (The law did not change the pensions of public employees who had already purchased airtime.)
The California Supreme Court ruled against the firefighters, finding that the option to purchase airtime was not a protected pension right. However, it declined to rule on the continued application of the California rule.
California is not the only state to have adopted the rule. Of the roughly 12 states that adopted the rule, three have changed it, the court noted in its unanimous opinion.