A Tale of Two Lawsuits

In 2012, nine California public school students filed a lawsuit (Vergara v. California) alleging that state statutes on teacher tenure, layoffs and dismissal denied equal protection to students assigned to ineffective teachers. The students won in Superior Court but public employee unions appealed and won. Public employee unions played to win for their members. Also in 2012, voters in San Jose passed a ballot measure to reduce exploding pension costs. Public employee unions sued and the Superior Court rejected the reform that would save the most money, but the city did not appeal. San Jose did not play to win for constituents.

We’re not picking on San Jose. At least that city put a measure on the ballot to reform pensions. But all too often, elected officials in California fight harder for special interests than for constituents. In 1999 and the early 2000s, elected officials across the state granted retroactive pension increases and converted cost-of-living increases to fixed increases, thereby massively increasing pension obligations*. Yet most elected officials want you to think they can’t act symmetrically to reduce prospective pension benefits or suspend increases. But the California Supreme Court has never ruled on a case on point with the one that San Jose declined to appeal and recent decisions by the Court open the door to cases evaluating the ability to reduce benefits for years not yet worked.

As this report illustrates, cities like San Jose could save ~20 percent or more on pension costs and still leave police and fire employees with rich benefits. The missing ingredient is elected officials willing to go to the mat for constituents.

*Not surprisingly, the elected officials granting those increases were on the receiving end of political contributions from public employee unions. This is another example of why California must ban political donations from corporations, unions or associations that do business with the state or its subdivisions. Such a ban is a top GFC priority — and will be a war.