California’s pension law vs. another DOL

The Biden administration’s decision to block California’s access to $12 billion in federal public transit funding resurrects an old battle over California’s 2012 pension reform law. However this conflict is resolved, it should not entail any effort to upend the highly necessary California Public Employees’ Pension Reform Act.

PEPRA, which was signed into law on Sept. 12, 2012 by Gov. Jerry Brown, implemented a range of modest and common-sense reforms to help mitigate the unsustainable trajectory of pension costs.

The bulk of the reforms impact public employees hired after implementation of the law, with less generous pension calculations allowed.

In response, the U.S. Department of Labor (DOL) in 2013 under President Barack Obama blocked California’s access to federal transit funding on the grounds that PEPRA violated the collective bargaining rights of transit employees.

In 2015, U.S. District Judge Kimberly J. Mueller rejected the DOL’s arguments, noting that the law doesn’t prevent collective bargaining over pensions and concluded the department “misrepresented the law and did not consider all relevant factors.”

In the interim, however, California responded to the Obama administration’s withholding of federal funds by temporarily exempting transit workers from the pension reforms.

That should be avoided this time as the Biden administration has now followed in the Obama administration’s footsteps by similarly holding up federal transit funding over PEPRA.

According to the Associated Press, a letter from the Labor Department argues that PEPRA “continues to interfere with the collective bargaining process regardless of the specific terms of workers’ collective bargaining agreements now in existence.”

But, as California Sens. Dianne Feinstein and Alex Padilla countered in a recent letter, the Biden administration’s position is “at odds with multiple state and federal court decisions and past Labor Department precedent.”

Predictably, some are hoping for a repeat of the exemption provided after the Obama administration’s withholding of funds.

“Under this decision, if we could go back and get those bargaining rights back and address it again, we could change some of the inequities that exist,” Keith Garcia, president of the Bay Area Rapid Transit Police Officers Association, told the Sacramento Bee. “We have a two-tier system, the classics have it much better than the PEPRA.”

While it’s obvious why public employees hired after the implementation of PEPRA would want to see reforms undone, it’s important for California to stand by PEPRA and oppose any exemptions. PEPRA was implemented to mitigate and in the long term ease the worst of the pension crisis. Public budgets at all levels of government have experienced “crowd-out” as pension costs eat up funds that could have gone to any litany of things.

The Biden administration should just reverse itself. Until then, no changes should be made to PEPRA.