Labor Unions Move to Challenge California Pension Changes for Public Workers

Before they sought to persuade voters last year to raise taxes, Gov. Jerry Brown and Democratic legislative leaders agreed on sweeping changes in pension law they said would save California government significant money over time.

Just months after the election, however, the overhaul is under attack on two fronts across the state, as labor unions challenge elements of the package in one local agency after another.

In January, a measure surfaced in the Legislature to exempt thousands of regional public transportation workers from the law after mass transit unions began filing objections to the changes with the federal Labor Department. The unions argue that agencies receiving federal money must bargain such changes.

Separately, lawsuits are now challenging aspects of the pension law in a handful of the quasi-independent 20 county retirement systems that operate from Mendocino to Los Angeles.

Unions are suing pension boards in Alameda, Contra Costa, Marin and Merced counties to overturn parts of the new law that restricted how pensions are calculated for workers in the systems before the changes took effect on Jan. 1.

A leading pension reform advocate, Dan Pellissier, said Tuesday the legal challenges by labor unions expose a thousand-cuts strategy intended to eviscerate the law. He said they are seeking to undermine the law via judges and union-backed politicians.

"The unions have been throwing a bunch of weak arguments at the wall and seeing which ones stick, hoping to give sympathetic decision-makers something to latch on to," he said.

Steve Maviglio, spokesman for a public employee union coalition that publicly opposed pension reform last year, said labor leaders in his group have moved on.

Members of the coalition, Californians for Retirement Security, are focused on upcoming labor negotiations for their combined 1.5 million members, he said, and any notion that the unions have a coordinated plan to legally undercut the law is "pure helicopter theory."

The pension law requires that all state and local employees pay at least half the normal cost of their pensions. Those hired on or after Jan. 1 will have to work longer to retire and receive less generous benefits, including a cap on their pay for pension purposes.

The new law is projected to save up to $60 billion over 30 years.

But supporters of the changes have been concerned that Democratic politicians won't stand up for the new pension rules they created last year. State government is benefiting from higher taxes voters agreed to in November when they approved Proposition 30, change supporters say, eliminating political pressure to prove they are good stewards of public money.

Neither the pension boards targeted by the lawsuits, Attorney General Kamala Harris nor Gov. Jerry Brown -- who championed the law -- have yet sent attorneys to counter those unions' complaints in court.

After staying out of the fray for several months, Brown this week told the counties that he has asked Harris to defend the public pension law.

"We've been waiting and waiting," said Vincent Brown, chief executive officer of the Alameda County Employees' Retirement Association.

Brown spokesman Gil Duran said the governor "will take all necessary steps to preserve the pension reform enacted in 2012."

While the lawsuits vary in the particulars, they share a common union contention that the types of pay considered for pension purposes can't be altered for existing members.

In Merced, for example, a union representing county sheriff's employees and the American Federation of State, County and Municipal Employees filed suit after the local pension board said the new law would not use accumulated vacation pay when calculating retirement benefits for anyone who retired after Jan. 1.

The unions argue that employees have worked with the understanding that the pay would count. Many saved up vacation days in anticipation of higher pensions.

For years, in fact, the Merced County Employees' Retirement Association encouraged employees to build up their vacation time before they retired. Its member handbook included a section titled "Optimizing Your Retirement," which reminded employees that "you will receive up to 160 hours of your vacation payoff amount applied towards your final compensation in addition to getting paid for it, which will increase your final average salary."

The new law led to "a rash of people retiring" before the year's end so they could get the leave credit, said Merced pension plan administrator Maria Arevalo.

In Marin County, the lawsuit specifics differ since the local pension system didn't allow accrued vacation to figure into pensions.

Instead, public employee unions there have sued the county pension board to keep other kinds of compensation in pension calculations, such as the extra payments employees receive if they don't take their employer's health insurance. The unions also want to keep on-call pay and similar after-hours money in their retirement formulas.

Last month the Teamsters and two other unions backed the bill that would exclude 20,000 local and regional mass-transit workers statewide from Brown's pension reform package.

Assemblyman Luis Alejo, D-Watsonville, introduced the measure after the unions complained to federal authorities that the new pension law violated their collective bargaining rights. Under federal law, an agency must preserve employees' bargaining rights or similar workplace processes or forfeit mass-transit grant money.

About $2 billion in annual funding for mass transit upkeep and construction is at stake, according to Alejo. The unions' complaints so far have held up roughly $40 million for Sacramento Regional Transit District's light-rail extension into Elk Grove.

Source: http://www.hispanicbusiness.com/2013/2/14/labor_unions_move_to_challenge_california.htm

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