Pension Meltdown
Labor Board Scraps Pension Reform in San Diego

With cities and states around the country facing untenable pension obligations and entrenched union opposition to reform, the last thing we need is for quasi-judicial officials to start nixing reforms when they are finally implemented through the democratic process. And yet that is exactly what is happening in California, where the state’s labor board is forcing San Diego to abandon a sensible and necessary rollback of the city’s generous defined-benefit pension program. The Los Angeles Times reports:

A new state labor board ruling casts doubt on San Diego’s aggressive pension cutbacks and orders the city to spend millions creating retroactive pensions for roughly 2,000 employees hired since those cutbacks took effect.

City Atty. Jan Goldsmith said he hopes to quickly get City Council approval to appeal Tuesday’s ruling by the Public Employment Relations Board, which he has criticized as staunchly pro-union.

Goldsmith predicted that a state appellate court would nullify the ruling and vindicate the pension cutbacks, which city voters easily approved as Proposition B in 2012. The measure replaced guaranteed pensions with 401(k)-style retirement plans for most new city hires.

Here at Via Meadia, we’ve been sounding the alarm bells about the nation’s looming public pension crisis, and advocating reforms like switching from defined benefit plans to a worker-based, portable pension system, for quite some time. Thanks to years of false promises and dishonest accounting, unfunded state and local pension obligations total in the trillions of dollars. Some blue state legislators have already started calling for massive federal bailouts. How we dig ourselves out of this mess will be one of the great fiscal and political questions of the next generation. It is a daunting task—and may turn out to be an impossible one if courts and administrative agencies keep blocking progress at every turn.

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