A ruling from the California Supreme Court Monday had the effect of reaffirming the “California Rule,” which holds that fundamental public sector pension rights are vested and cannot be terminated or modified without equivalent compensation or benefits by state or local agencies.
The ruling was widely reported as chipping away at California’s public pension protections, but it actually decided a narrow issue, while affirming California’s commitment to protecting vested retirement benefits, according to knowledgeable observers.
The narrow issue addressed a benefit known as “air time,” the ability of state and local employees in the PERS and STRS retirement systems to purchase up to five years of additional service credit.
“Air time” was discontinued as an option in 2013. A firefighters’ union sued to reestablish it as a vested right.
The state’s highest court ruled that there is no vested right to purchase future air time; it can be modified or eliminated without violating fundamental pension protections. On the other hand, the court ruled, those who had purchased air time in the past had a right to keep the benefit.
Importantly for public sector retirees, in reaching its decision, the court reviewed and affirmed the “California Rule” as valid.
“We have no occasion in this decision to address, let alone to alter, the continued application of the California Rule,” the decision stated.
Because air time was not offered by the University of California retirement system, the Court ruling was mainly important to Lawrence Livermore National Laboratory retirees in its support of the California Rule protecting vested pension benefits, according to the observers.