George Skelton in the L.A. Times: Public pensions are protected in the Constitution.
This issue may resurrect interest in the contracts clause of Article I, Section 10: “No State shall … pass any … Law impairing the Obligation of Contracts…” And it may pose a conflict for conservative originalists. As Skelton reports, public sector unions are invoking the clause to challenge pension reforms such as the package proposed by California Governor Jerry Brown:
"Employees are entitled to benefits in place during their employment," asserts the California Public Employees' Retirement System in a recent report.
"Promised benefits may be increased during employment, but not decreased, absent the employees' consent…. The courts have established that this rule prevents not only a reduction in the benefits that have already been earned, but also a reduction in the benefits that a member is eligible to earn during future service."
Skelton also reports this from former Chapman law dean John Eastman, a strong originalist who’s working for pension reform:
His reading of two centuries of case law on the contract clause, Eastman says, is that public pension plans can be modified if there's "a real serious fiscal problem, a dire financial need — and the system is underfunded. Given the circumstances in California, I think we would meet the legal requirement."
He adds: "Guys in the Legislature made [pension] promises they cannot fund. Making sure that future generations of taxpayers are not held to that obligation is not a violation of the contracts clause."
That might be right under the current law of the contract clause, because the Supreme Court notoriously rendered the clause something close to a nullity in the New Deal era on manifestly nonoriginalist grounds. But is there an originalist argument that would allow altering pension obligations? That seems a more difficult question, and one that may be worth some close attention.
Posted at 7:00 AM