Supreme Court Pension Ruling Eliminates Ability to Purchase "Air Time" Service Credit – No Impact on California Rule

The California Supreme Court published a March 4, 2019 opinion in Cal FIRE Local 2881 v. CalPERS. The lawsuit challenged the portion of the Public Employees’ Pension Reform Act of 2013 (PEPRA) which eliminated the ability of state employees to purchase up to five years of additional CalPERS service credit, known as “air time.”

Although the Court’s decision upholds the portion of PEPRA which took away the opportunity to purchase air time service credit, the ruling is narrow in scope. The Court held the ability to purchase air time was not a constitutionally vested pension benefit protected by the contract clause. It is important to note this decision has no impact on those who purchased additional service credit prior to 2013.

Because the Court concluded the opportunity to purchase additional retirement service credit was not protected from impairment by the contract clause, its elimination does not implicate the State Constitution or the “California Rule.” Since 1955, the courts have held under the California Rule that once pension benefits are granted to a public employee, they are vested and cannot be modified for the duration of an employee’s career.

While this decision has no impact on the California Rule, two significant pension cases which may impact the California Rule remain pending before the State Supreme Court. ACSS previously filed a request that these cases be reviewed because of the lower court departure from precedent concerning vested pension rights. We are also working closely with the law firm handling these cases to ensure your vested pension interests and the California Rule are protected.

ACSS’ legislative efforts to preserve and protect members earned and promised pension benefits continue. ACSS is also part of Californians for Retirement Security, a coalition of more than 1.6 million public employees and retirees that seeks to educate the public, lawmakers, and the media regarding public employee pensions.

ACSS will continue to keep you apprised of important pension issues and inform you of actions taken to protect the interests of excluded state employees.