Can California Local Government Employers Reduce Benefits Plan Costs?
The boom days of the millennium decade’s early years are over, but the now unsustainable benefits packages negotiated by California state and local governments and their employees remain – some representing as much as 40 percent of overall budget costs. Our discussions with local government managers and their advisors suggest a tremendous amount of confusion and misinformation about their ability to align employee benefits costs with their fiscal realities. This article discusses one source of much of the confusion – interpretations by California courts of the Constitutional prohibition against impairment of contracts – and why local governments have more latitude than they think. The Problem And The Obstacles Perceived Much of the confusion over the rights of public employees to retirement benefits stems from the way California courts have described these rights. In San Bernardino Public Employees Association v. City of Fontana, the Court of Appeal quoted Kern v. City of Long Beach: “
