California Supreme Court Negligently Sidesteps Important Issue to Block Meaningful Pension Reform Leaving Taxpayers Facing Billions in Unfunded Pension Debt
In a widely-anticipated ruling on whether lavish and unsustainable pension benefits for state and local government employees can be reformed or reduced, the California Supreme Court punted the entire issue yet again.
“We’re disappointed that the liberal California Supreme Court once again is serving as a barrier to common-sense reform of unsustainable and indefensible gold-plated government pension payouts,” said Carl DeMaio, Chairman of Reform California.
In the narrow ruling that upheld the elimination of the right to purchase service credits to spike pensions, the justices opted to leave the problematic “California Rule” intact that has been a legal barrier to meaningful reform to unsustainable pension benefits. Specifically the Supreme Court ruling said “We have no occasion in this decision to address, let alone to alter, the continued application of the California Rule,” the court said in the decision. The California Rule has been used repeatedly by politicians and government union bosses to block pension reform.
DeMaio is author of the San Diego Pension Reform Initiative that overwhelmingly passed in 2012 to switch city employees from defined benefit pensions to 401(k) defined contribution accounts. DeMaio is working with a bipartisan coalition to enact statewide pension reform.
A recent study by Stanford University suggests that unfunded debt for California state and local pension and retiree healthcare obligations stands at over $1 trillion. The state’s own official estimates using flawed accounting rules puts the liability at nearly half-a-trillion dollars and rising.
In addition to the debt burden placed on taxpayers, an examination of individual pension payouts to state and local government employees shows extreme abuses in the system resulting in six-figure pensions, million-dollar lump-sum payouts, and hundreds of thousands of retired state and local government officials taking in annual pension allowances that exceed their highest base salaries while working for government.
“These government pension abuses must be reformed or California taxpayers will face a future of higher taxes, fewer services, and bankruptcy in our cities and school districts,” DeMaio concluded.