Saturday, April 2, 2011

California Lawyer Magazine on Public Pensions

From California Lawyer, "A Thousand Cuts" by Thomas Brum:

In February 2010 the Pew Center on the States reported that, in the next 30 years, state governments would be on the hook for $3.35 trillion for pensions. Two months later the Stanford Institute for Economic Policy Research reported that California's three main public pension funds had unfunded liabilities of $425 billion. And last October the Milken Institute reported that, by 2013, the combined liabilities of these three funds will be more than 5.5 times larger than total state general fund revenue...

In California, the state constitution protects public pension benefits, like other contracts, from impairment. (Cal. Const., Art. I, § 9.) Described succinctly by the state Supreme Court, "A public employee's pension constitutes an element of compensation, and a vested contractual right to pension benefits accrues upon acceptance of employment." (Betts v. Bd. of Admin., 21 Cal. 3d 859, 863 (1978) (citing Kern v. City of Long Beach, 29 Cal. 2d 848 (1947)).)...

[T]he court noted, " not unconstitutional." (County of Orange v. Ass'n. of Orange County Deputy Sheriffs, 2011 WL 227711 at *8.)

More here. Unfortunately, the article doesn't discuss how these government benefits were negotiated. Many people don't know that government workers received their compensation packages behind closed doors--away from the average voter's oversight--due to an exception in the Brown Act for labor negotiations. Thus, government union compensation contracts are not the same as ordinary arms-length contracts. Instead, such contracts are the product of union organizing and using superior organization to get better compensation for themselves. But when compensation is negotiated behind closed doors and in a system where residents/voters must pay whatever is negotiated, it is clear that government unions have an advantage that is not necessarily compatible with the interests of the general public.

Private unions are different. If a GM worker is paid a million dollars a year, it does not necessarily concern me, because I do not have to buy a GM product. I have a choice, and if a private union gives themselves overly generous pay packages, they destroy the company and their own work prospects. No such check and balance exists when government unions negotiate overly generous compensation packages. Taxpayers must pay whatever is negotiated behind their backs, no matter how outrageous. If you say the problem is negligent oversight by politicians, I agree, but when the system is designed to favor politicians who cozy up to government unions, it's hard not to blame government unions as well as the voters.
Just my two cents.

1 comment:

Anonymous said...

You're wrong that elected officials and the community are powerless against unions. First and most importantly, elected officials openly vote at public meetings on whether to accept a proposed contract. The community is given the opportunity to speak for or against a proposed contract.

And not all union contracts are accepted. For example, the Ashland City Council voted in March to deny a union contract.

And if the community feels that their elected officials are beholden to unions, they have the power to vote the officials out and replace them. That's the power of the ballot.

So if you have a problem with a union contract, contact your elected officials and ask why they voted for it. Better yet, get involved in the process. Or if you want to make real change, run for office and get elected.

And yes, you can win without union backing. It's been done countless times. San Jose Mayor Chuck Reed was first elected to the office of Mayor without any real union support and so was San Jose City Councilmember Sam Liccardo.