Oral arguments in the California Supreme Court began last Tuesday in a case filed by the Deputy Sheriffs Association of Alameda County union that represents another battle in the war between public employee unions, their pensions, versus local municipalities.
With a particularly harsh recession on the horizon, the case could be pivotal for cities and counties across the state, as budget shortfalls balloon and cuts to staff and services begin possibly in the next few months in some locales.
The state Supreme Court case again examines what is known as the “California Rule.” The basic purpose being that negotiated public employee contracts cannot be changed by cities to negatively affect workers’ bottom line. Meaning, in times like a deep recession, cities struggling to balance large budget deficits can’t simply reduce pay and benefits, but only if the loss is offset in another part of the employees’ compensation.
The matter before the court also includes a practice known as “pension-spiking,” when an public employee, for example, cashes in unused sick leave or puts in larger than normal overtime hours prior to retirement in order to boost their retirement pay.
But the argument being made by the sheriffs deputies union, and other local public-sector unions that have joined the case, is the benefits that may be used to spike pension were always part of the deal.
“One person’s pension spiking is another person’s expectation of a promise,” said David Mastagni, an attorney for the Deputies Sheriff Association of Alameda County. “These items of compensation (were) included in order to induce them to select working for the Alameda Sheriff’s Department as opposed to another employer,” Calmatters reported.
The “California Rule” and pension-spiking also came before the state Supreme Court in March 2019, with the court finding the practice of public employees increasing their “air time” was not a vested right. They made no ruling, however, on the “California Rule.”
The ramifications of the case could make a great impact on how cities in the East Bay navigate a potentially brutal recession due to covid-19.
Flashback to the Great Recession when public employees unions and belt-tightening cities clashed in the East Bay over the issue of rising pension and other benefits costs. Many public employees eventually coalesced over the idea of paying some costs of their own pensions, but not before being used as a scapegoat for staggering budget deficits and diminishing levels of city services. Although the Great Recession began in late 2008 and technically lasted about one year, its effects reverberated locally until roughly 2013.
The era made “unfunded liabilities” a catchphrase for moderates and conservatives to reign in labor unions in the East Bay. But as the Great Recession was replaced by several years of robust economic output, quite a few cities in the East Bay, including the county, made a point of steering budget surpluses into paying down unfunded liabilities. It’s a move that several local city finance directors have suggested could somewhat blunt the coming coronavirus-fueled economic downturn.