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Health & Fitness

Managing Public Employee Pensions

In what has been called a "closely-watched landmark case with major implications for cities around the state", Santa Clara County (California) Superior Court Judge Patricia M. Lucas has recently affirmed a previous California Supreme Court ruling that public employee pensions constitute "an element of compensation" which "may not be destroyed, once vested, without impairing a contractual obligation of the public employing entity."

In so doing, Judge Lucas strengthened the closely protected nature of public employee pensions in California. These pensions represent a promise on the part of the people in a community (made through their duly-elected representatives in government) that pensions will always remain a part of a public employee's total compensation, and not just an accessory that, once agreed upon, can be readily reduced or removed without due process.

This is not to say that public pensions are entirely untouchable. Judge Lucas also affirmed previous Court rulings that public pension provisions can, indeed, be changed, so long as those changes do not constitute an "impairment" of contractual obligations.

In fact, as Judge Lucas also ruled, one way that cities may begin offsetting the costs of these pensions is by reducing employee pay "to the maximum extent permitted by law." 

The challenge San Jose and many cities in California and, indeed, throughout the nation, face is that in past years, when their finances seemed more robust and stable, elected officials agreed to contract terms that generously increased pension benefits for their public employees and particularly for their safety employees...police officers, firefighters and emergency medical technicians.

This proved especially short-sighted on the part of some city officials who should have been more conservative in their promises to public employees and more circumspect in the manner in which they chose to commit public funds.

Some are quick to condemn safety employees and the collective bargaining units which represent them during contract negotiations. Their detractors describe them as "greedy", "inconsiderate", and in other, far less civil, terms. However, a public safety employee "union" has but one primary responsibility: to bargain in good faith and in a lawful manner for the best wages, benefits, and working conditions it can secure for its members.

In that purpose, a police or fire employee "union" is no different from any other labor union, but they do differ in other ways. Unlike their private sector unionized counterparts, public safety employees cannot engage in job actions such as work slow-downs or strikes. Nor should they be able to. Imagine a firefighter work slow-down, where they deliberately take twice as long to respond to a fire. Or a police strike where there was suddenly no one to respond to the armed robbery or gang fight in progress?

Put simply, public safety employees should have no less a right to be able to ask for the best pay and benefits they can receive from their employers and elected public officials must be no less circumspect in considering these requests than private sector employers have learned they have to be.

Public coffers are not bottomless, and the tolerance of taxpayers is not infinite. Most cities in California participate in the State Public Employee Retirement System (PERS). Recent reports have estimated California's total public pension unfunded liability to be somewhere between $200 - $300 billion. These are numbers that even California's monstrous annual GDP cannot easily shrug off or readily absorb. 

Elected officials must exercise restraint in making promises to their unionized labor force, because as this recent court decision makes plain, these are matters of legal employment contract.

For their part, police officers, deputy sheriffs, firefighters, and EMT's should understand what unionized private sector employees are also coming to learn, and sometimes quite painfully: No given workforce has a monopoly on its jobs. Employers always have alternatives available if the cost of the existing workforce begins to exceed fiscal practicality.

And these employees should remember one more thing: Where contract negotiations are concerned, 80% of something, is usually far better than 100% of nothing.

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Author John B. Greet is a Long Beach native and retired LBPD Sergeant, currently living in the Pacific Northwest.

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