By Jeff Chang
The California Supreme Court recently issued its decision in the Cal Fire Local 2881 v. CalPERS case – the first of six so-called “California Rule” (“Vested Pension Rights”) cases pending before the Court. The California Rule, in essence, states that: “A public employee’s pension constitutes an element of compensation, and a vested contractual right to pension benefits accrues upon acceptance of employment. Such a pension right may not be destroyed, once vested, without impairing a contractual obligation of the employing public entity.” (Betts v. Board of Administration). In what many might characterize as a significant disappointment, there was no “knockout” of the California Rule. In fact, the Court, decided that it could resolve the matter without specifically addressing the California Rule. Nonetheless, the Court ruled in favor of the California Legislature and CalPERS in holding that employees’ right to purchase nonqualified service credit, or “airtime,” was not a right protected by the contract clause of the California Constitution and, therefore, could be altered or eliminated at the discretion of the Legislature. Round one to the Legislature.
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