The challenges facing state-level pension reformers in the United States are both complicated and considerable. Even more bewilderingly, laws on whether state and city governments can cut pensions vary wildly between localities. Mary Williams Walsh has an excellent piece over at the New York Times detailing the variations:
“…for constitutional reasons, the federal law is not binding on states or cities, which has led to a patchwork of litigation and outcomes.
“It’s hard to keep it all straight,” said Josh B. McGee, vice president for public accountability at the Arnold Foundation, which tracks the litigation on a public website.
Pensions can be cut in any number of ways, and challenges are brought on a variety of legal theories. A winning argument in one state may fail in another. To some extent, outcomes can be handicapped along red-state and blue-state lines — but not with pinpoint accuracy.
State supreme courts in traditionally blue California, New York and Oregon, but also in red Arizona, have ruled that public workers’ pensions are set in stone from the first day on the job and cannot be reduced.
But state courts in red South Dakota, blue Minnesota and variable Colorado and New Mexico have ruled that public pensions can lawfully be cut — even for people who have already retired. In the past, existing retirees’ benefits were considered inviolate.”
With pension problems driving cities across California bankrupt and states like New Jersey, Illinois, and Rhode Island—not to mention Puerto Rico—into states of crisis, pension reform is bound to become a hotter issue national issue. Walsh does a good job outlining the details; read her whole piece as a primer on the subject.