If we can’t get rid of the California Rule, can we at least ditch the name?
The California Rule is the misleading moniker we’ve given to our state’s most troublesome legal precedent: that public employees are entitled to whatever pension benefits were in place when they started work. Pension benefits in California are so monumental that they might as well be set in the stone of El Capitan—they can never be cut, unless they are replaced with another benefit of equal value.
You can say that such an iron-clad guarantee is good for public workers. But you can’t say that it’s Californian. In virtually every other context of life here, our state is defined by its lack of guarantees. The California Rule on pensions is really the California Exception.
For all its wonders, California is a place where you can count on almost nothing—not even the ground beneath you will stand still. While the Golden State famously produces myriad regulations the complexity and overwhelming number of them mean that there are few clear rules to rely upon. The California Rule itself has contributed to this problem. By requiring ever-escalating retirement benefits that force cuts in public services, the California Rule has effectively made a lie out of every significant guarantee in the state constitution, from balanced budgets to speed trials.
Like Snoop Dogg and Billie Jean King, the California Rule was born in Long Beach. In 1951, the city government there tried to reduce the pensions of police officers and firefighters, and the California Supreme Court blocked it, creating a new precedent. The California Rule got its name because most of the rest of America doesn’t follow it. In other places, only pension benefits already earned by actual work are protected. But California is one of only 12 states that have protected the right to earn future pension benefits for work not yet performed.
This protection of retirement benefits, in combination with our limits on taxation like Prop 13 help explain our persistent budget deficits and our underfunded schools and health programs, and overcrowded prisons. Nearly every significant local or state tax increase of the past two decades has partly gone towards rising retirement costs.
The California Rule is so strong that it defeats our direct democracy; San Jose and San Diego citizens voted to alter pensions to save services, only to be overruled by courts citing the California Rule. It also makes liars out of even our best leaders, who talk about the need to embrace sustainability and equity, even as they decline to change the state’s most unsustainable and unequal rule.
The California Rule has been in the news recently for two reasons. First, teachers’ strikes in Oakland and L.A. spotlighted how rising pension costs are consuming money that should go to compensating today’s teachers. Second, the California Supreme Court has begun looking at legal cases that challenge pension protections, including the California Rule itself.
But so far, the justices have been unwilling to overturn it. If the high court doesn’t find some courage on the subject, the California Rule will result in statewide disaster. At best, this will be a steady, decades-long degrading of services, as more tax dollars are diverted to cover the retirements of retirees.
Worst case, a big recession or a huge stock market decline could combine with the California Rule to create an epic fiscal calamity. With pension funds falling short, cash-strapped governments would have to put even more money into shoring up retirement benefits that can’t be reduced because of the California Rule, leaving little money for anything else. Hundreds of schools would close, local governments would go bankrupt, and new taxes and budget cuts to cover funding gaps would further undermine the economy. The public could erupt in fury that puts the entire retirement system at risk.
Let’s end the California Rule now before crisis hits. Because self-inflicted disaster should be the exception, not the rule, in California.
Joe Mathews writes the Connecting California column for Zócalo Public Square.