Auld Lang Syne
At this time of year, the words of the old Scots poem, written by Robert Burns in the late 18th Century, and sung aplenty at New Years events worldwide—or Hogmanay as it is known in the Old Country—often come to mind. They speak to the greeting and toasting of long-standing friendships and acquaintances. So here’s a raised glass to all the friends and acquaintances of this column. “Lang may yer lum reek.”
***
2012 has been the latest in a series of difficult years for working men and women in the public sector here in California. Concession bargaining remains the norm, pension attacks continue and those who devote their professional livelihoods to the public good too often remain a political football.
But 2013 promises to be a transition year. The latest Legislative Analyst’s Report (http://lao.ca.gov/reports/2012/bud/fiscal-outlook/fiscal-outlook-2012.aspx) suggests a dramatic improvement in California’s budget situation:
“The state’s economic recovery, prior budget cuts, and the additional, temporary taxes provided by Proposition 30 have combined to bring California to a promising moment: the possible end of a decade of acute state budget challenges. Our economic and budgetary forecast indicates that California’s leaders face a dramatically smaller budget problem in 2013–14 compared to recent years. Furthermore, assuming steady economic growth and restraint in augmenting current program funding levels, there is a strong possibility of multibillion–dollar operating surpluses within a few years.”
(Executive Summary, California Legislative Analyst’s Report “The 2013-14 Budget: California’s Fiscal Outlook,” November 14, 2012.) The Bay Area and Silicon Valley economies are expanding robustly. And the housing market appears well into a turnaround. Obviously there are plenty of uncertainties out there, but hopefully this is the year we collectively turn a corner.
On the legal front, pensions remain a hot item. At the printing deadline for this article, CalPERS issued a new, December 27, 2012 Circular Letter arguing for a more expansive view on what should be treated as compensation earnable for new employees under the Governor’s new retirement law, PEPRA. (http://www.calpers.ca.gov/eip-docs/employer/cir-ltrs/2012/200-062-12.pdf.) Prior to this Letter, numerous County Retirement Associations (under the so-called ’37 Act) had been taking a very narrow view of the new definition of “compensation earnable” under sections of PEPRA, and CalPERS had yet to weigh in. Many argued that PEPRA contemplated only base salary being pensionable for new employees. CalPERS, however, is taking a more expansive view, recognizing the longstanding history of including regular service and skills based compensation in pension calculations. It is to be hoped that CalPERS’ view—which takes a balanced view of the new act—is given due consideration by retirement associations throughout the state.
The Public Employment Relations Board finished the year with a slew of new decisions. One of note came in International Association of Machinists v. City of Long Beach, PERB Decision No. 2296-M, December 4, 2012. The decision involved an issue we have seen in multiple jurisdictions in recent years—namely the efforts of public agencies to unilaterally implement furloughs or other cost-saving efforts notwithstanding closed collective bargaining agreements or bargaining obligations, usually asserting fiscal emergencies or managerial prerogative. The decision is a strong repudiation of the argument that public agencies have a fundamental managerial right to furlough. They do not. PERB reaffirms that public entities are obligated to bargain fully about such issues and may not “end run” bargaining through direct city council action.
And speaking of fiscal emergencies, in 2013 we will all be keeping a close eye on how matters play out in San Bernardino and Stockton where heavy litigation of municipal bankruptcy is expected. In San Bernardino, the City has refused to pay CalPERS for outstanding and prospective pension obligations, prompting the Retirement System to move quickly to intervene in the City’s bankruptcy proceedings in order to protect the rights of members.
Your columnist was struck by recent back-to-back stories on NPR’s “California Report.” The first involved PG&E’s intention to try to raise $300 million through increased rates to consumers to fund system upgrades deemed necessary as a result of the systematic problems that contributed towards the San Bruno gas explosion. The next story highlighted San Bernardino’s unwillingness to consider any revenue measures to address its plight.
Best wishes to all for a healthy and prosperous 2013: “we’ll tak a cup o’ kindness yet,
for auld lang syne.”
