U.S. Secretary of Labor Thomas Perez has waded into the effort to reform California's public pension system by standing on the side of labor unions – and against Gov. Jerry Brown's plan.
Perez sent a letter that did not come to light until last week, when the Sacramento Bee newspaper obtained a copy of it. In it, he gave the state until this past Friday to exempt the workers from a September 2012 law or risk losing billions in federal transportation funds, including $1.5 billion this year. The unions and the state were holding negotiations Monday.
In his letter, Perez said the reform "diminishes both the substantive rights of transit employees under current collective bargaining agreements and narrows the future scope of collective bargaining over pensions."
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The contentious issue involves changes to the pensions of 20,000 transit workers approved in a law designed to ensure the retirement funds for all state workers remain solvent. The pension reform does not affect existing workers. New workers will receive lower retirement benefits, while existing workers will see no reduction. The state expects to save about $240 billion over 30 years.
The Obama administration says changing the pensions of 20,000 transit workers violates a 1964 federal law, while the unions say the law violates their collective bargaining rights.
The California Assembly is considering a bill sponsored by Rep. Luis Alejo, a Democrat, which would leave the transit workers out of pension reform. Brown has proposed excluding the transit workers from the reform plan until a settlement can be negotiated.
Websites, including the Wall Street Journal, and newspapers, including the Fresno (Calif.) Bee, have weighed in with editorials and opinion columns urging the state to stand firm. They echo the state's fear that if transit workers are exempt from the law, other unions will sue for the same right and say the federal law is being misused in this case.
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