John Eastman (R)
SACRAMENTO, Calif. (Legal Newsline)- Retroactive pension increases paid to some retired public employees in California are unconstitutional, a Republican candidate for state attorney general said Monday.
John Eastman, a conservative constitutional scholar vying to be California's next chief legal officer, said that labor contracts retroactively boosting pensions for local government workers violates a 1970 provision in the state constitution that prohibits increasing compensation for work that was previously completed.
In 2002, the state's Democratic-led Legislature authorized local government entities -- such as cities, counties and school districts -- to change their pension formula from 2 percent-at-50 to 3 percent-at-50, meaning that public employees at least 50-years-old can get retirement pay equal to 3 percent of their best year's salary for every year they worked, to a maximum of 90 percent.
Statewide, the retroactive pension increases will cost local city and county governments about $8 billion in unfunded liability, Eastman told Legal Newsline in an interview Monday.
"We're taking money that ought to be going to current services and instead giving it to retirees and talking about layoffs," Eastman said. "The notion that this offers an incentive to workers is flat-out wrong; this was an outright gift to public employee unions."
Eastman said if elected attorney general in November he will take legal action against the retroactive pension increases, approved by their respective governing bodies.
"I would quickly move to nullify those contracts because they are illegal," Eastman said. "The case law in this state is pretty clear that illegal contracts are void."
As for public employee unions taking special political aim at him in the AG race over his desire to eliminate the retroactive pension increases, Eastman said that would not be in the best interest of their rank-and-file membership.
"Their very jobs may depend on my winning the challenge to the illegal contracts," Eastman said, noting that increased pension liability is costing scores of city and county jobs by eating away at local governments' general funds.
If Eastman is successful, he could save many cities and counties from bankruptcy, said Jack Dean, president of the Fullerton Association of Concerned Taxpayers and editor of the group's PensionTsunami Web site.
"This is unsustainable," Dean said. "The real problem here is that in the private sector when you increase benefits it's for the years going forward or they go broke, and that is not what has been happening in government."
Most local governments in the Golden State have their pension funds handled by CalPERS, the California Public Employee Retirement System. An exception is Orange County, which is in the throws of a legal battle to recover the retroactive part of its 3 percent-at-50 pensions.
The Orange County Board of Supervisors' lawsuit against the county's pension fund is not alone in its push against the pension fund increases.
There are three proposed statewide ballot measures that would take aim at public pensions. One of the measures would cap annual pensions at $100,000 while the other two would create a two-tiered system in which future public employees wouldn't get the same level of benefits now received by many government workers.
The California Foundation for Fiscal Responsibility has posted about 9,300 names of public retirees drawing annual pensions of more than $100,000.
Eastman, former dean of the Chapman University College of Law, joins Republican state Sen. Tom Harman of Huntington Beach and a crowded field of Democrats in vying to succeed Democrat Jerry Brown as attorney general.
Before being appointed dean of Chapman's law school in 2007, Eastman was director of the Center for Constitutional Jurisprudence, a public interest law firm affiliated with the Claremont Institute, a conservative Southern California think tank.
Eastman earned his law degree from the University of Chicago Law School in 1995. He has a Ph.D. in government from the Claremont Graduate School, and was the 1990 Republican nominee for Congress in California's 34th District.
From Legal Newsline: Reach staff reporter Chris Rizo at firstname.lastname@example.org.