Legislative Counsel Opinion on Public Employees Retirement System

Senator Perata has requested and received a Legislative Counsel Opinion on whether the rate of contribution of current state employees to the Public Employees Retirement System is a vested right, and to what extent, if any, may an increased rate of contribution be bargained by a representative of employee members or imposed on unrepresented management members and exempt employee members.

The Legislative Counsel opinion states the following.

1. The courts would apply an independent analysis to any modification in the employee contribution rate, and for it to stand, the change would be required to have a material relation to the theory and successful operation of the pension system, and changes that disadvantage vested employees would have to be accompanied by comparable new advantages.
2. Even if the increase in the employee rate were to be negotiated, the courts would still apply the above analysis. Therefore, a collectively bargained increase in the employee contribution rate could be ruled illegal and unconstitutional if it did not have a material relation to the theory and successful operation of the pension system, and the increase in rate was not accompanied by comparable advantages to the affected employees.

 The same applies to unrepresented and exempt employees.

Dave Low of the California School Employees Association wrote that "This is a very good opinion for workers. Essentially, it opines that neither the Governor (through collective bargaining), nor the Legislature (through legislation), can impose an increased contribution rate on state employees unless a comparable new advantage is also provided."

Teven Laxer
Senior Labor Relations Representative
California State University Employees Union