Biden, like Obama, attempting to weaken California pension reform

Nine years after California implemented public employee pension reforms that are finally showing meaningful results, a Democratic president is once again trying to use transit funding that serves the state’s neediest residents as a cudgel to weaken the changes.

Following in the footsteps of the Obama administration, President Joe Biden’s labor secretary is siding with transit workers in their efforts to escape the 2012 state pension law provisions championed by former Gov. Jerry Brown.

Obama misused outdated federal law to threaten in 2013 to cut off transit funding from Washington, D.C., if California didn’t roll back key provisions of the pension law changes. Biden is now making the same threat.

This time, agencies across the state like BART, AC Transit, Santa Clara Valley Transportation Authority, Golden Gate Transit and the Los Angeles County Metropolitan Transportation Authority could lose $2.5 billion in pandemic relief funds for operations and at least $9.5 million over the next five years, primarily for capital expenditures, from the infrastructure bill Biden just signed.

U.S. District Court Judge Kimberly Mueller repeatedly rejected the Obama administration’s gambit. Then, the U.S. Labor Department during the Trump administration reversed course. But, now with Biden in office, the department is dusting off the Obamaera legal briefs and taking essentially the same case back to the same judge, hoping for a different result.

It’s the sort of cynical, behindthe-scenes ploy that would outrage voters across the country if they understood what Biden is doing. But don’t misunderstand, this isn’t some clean-cut partisan issue.

Democratic Gov. Gavin Newsom is just as outraged by the Biden administration move as his predecessor, Brown, was with Obama’s efforts.

Withholding federal funds “deprives financially beleaguered California public transit agencies that serve essential workers and our most vulnerable residents of critical support,” Newsom wrote in a Nov. 10 letter to U.S. Labor Secretary Marty Walsh.

It couldn’t come at a worse time. “Because of a dramatic decline in ridership” due to the pandemic, Newsom wrote, “public transit agencies rely more than ever on these federal grants just to keep trains and buses running and their workforces employed.”

But, like the Obama administration, Biden’s team has been so deeply in the tank with labor that they’re willing to go to ridiculous ends to appease the unions.

At issue are pension law changes passed by the California Legislature and signed by Brown in 2012 that recognized public employee pension benefits were overly generous and costly and the retirement systems were badly underfunded as a result.

The new state law left existing employees’ pension benefits mostly unchanged but created a second tier for future employees that put a reasonable cap on the benefits and required those workers to contribute more to the cost.

The pension law changes were expected to save $38 billion over 30 years. The rate of the savings has steadily increased as workers retire and new ones come on under the more-reasonable benefit structure.

But the new law quickly set off a legal showdown with Obama’s labor secretary, Thomas Perez, who sided with transit union efforts to undermine the pension changes.

The fight centered on a 1964 federal law that was designed to ensure public transit agencies didn’t bust unions as they acquired financially troubled private transportation companies.

It was passed in an era when private-sector unions were more powerful. Congress was concerned that the new public transit workers would lose collective bargaining rights they had gained in the private sector.

So the Urban Mass Transit Act made transportation funding contingent on Labor Department determination that contract benefits would be preserved and bargaining rights would continue. The law remains in effect today.

The Obama and Biden administrations, along with the nationwide Amalgamated Transit Union and local unions, including some from the Bay Area, argue that the federal law overrides the state’s ability to impose changes to its pension laws. As a result, Perez threatened to cut off federal funding in 2013 and now Walsh is doing the same.

The only problem is that Mueller has already rejected that argument. While the 1964 federal law protects collective bargaining rights, she ruled in 2014, it does not insulate transit workers from statewide changes that affect other workers as well and does not foreclose all state regulator powers.

The Department of Labor’s “failure to consider the realities of the process of public sector bargaining renders its decision arbitrary and capricious,” the judge ruled.

Now, seven years later, the Biden administration is starting the fight all over again. We’ll find out next year whether Mueller thinks anything has changed.