August 14, 2020

Court gives school districts, local governments limited win in ruling on pensions, sidesteps underlying issue

The CA Supreme Court gave revenue-strapped school districts and other public employers a narrowly tailored win but not the big decision they wanted recently.

The court unanimously ruled that the Legislature could eliminate pension “spiking,” in which employees “artificially inflated” their earnings in their last year of work by cashing in the value of accumulated leave and working extra shifts at higher rates. Padding income in turn increased a worker’s pension.

The court’s ruling was the second in two years in which it rejected a challenge by organized labor to the public employee pension reform law that former Gov. Jerry Brown shepherded through the Legislature. For advocates of further changes, the decision at least was not a defeat; it meant they could hold the ground they had gained.

But the court made that finding without taking up the biggest issue that Brown, school districts, cities, counties and other public employers were hoping the court would directly tackle: whether public employers and the Legislature have broader discretion to reduce the benefits that workers have earned.

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