It’s no secret that California has a large number of problems that need to be resolved, but in this past month, the issue of public pensions was mitigated due to the intervention of the Department of Justice. As a result of the intervention, taxpayers were spared from losing millions of dollars to a wasteful program.
Public pension funds have been plaguing California taxpayers for decades. Both programs—the California Public Employee Retirement System (CalPERS) and the California State Teachers Retirement System (CalSTRS)—have accumulated tens of billions of dollars of debt. In addition, malfeasance and mismanagement have permeated into those funds, which has only aggravated the issue.
After noticing the failure of both programs, it would seem advantageous for California to distance itself from pension funds and instead try to work towards a resolution for those programs. However, going back three years, California did the exact opposite. They introduced the CalSavers program which enables private employees to obtain a state-run retirement plan if they lack a retirement plan.
Not only did California meddle with pension funds in a different sector, but also created a substantial legal problem. Programs like CalSavers are solely under the jurisdiction of federal law, specifically, the Employee Retirement Income Security Act of 1974 (ERISA).
Besides the program affecting other states’ capabilities with regard to retirement, the legality of CalSavers was also brought into question. The Howard Jarvis Taxpayers Association (HJTA) is currently in court on the legality basis. As of right now, the case is currently awaiting judgment from the United States District Court for the Eastern District of California.
The state attempted to file a motion to dismiss the case completely but the state will ultimately be trumped due to the intervention of the DOJ. In a lengthy and thorough analysis, formally known as a Statement of Interest, the DOJ concurred with every critical argument made by the HJTA.
Public pension funds have been bankrupting California for decades now, putting many taxpayers at risk. The victory gained at the expense of the DOJ is a positive step in alleviating the issue California taxpayers face.
Photo by Bill Oxford
