{"title":"Statutes as Contracts? The 'California Rule' and its Impact on Public Pension Reform","authors":"Amy B. Monahan","doi":"10.2139/SSRN.1933887","DOIUrl":null,"url":null,"abstract":"State and local retirement plans are underfunded by trillions of dollars, at a time when many states are facing decreased revenues and increased social needs. The result is that many states are currently giving active consideration to how best to address the problem of state and local pension plan underfunding given a state’s limited resources. In many states, however, courts have held that the statutes creating state retirement systems create contracts between the state and employee that prohibit the state from making any detrimental changes to the benefits provided to current employees within such systems, even on a prospective basis. This article examines the development of such a rule in California, a state that has been widely influential in this area of law, evidenced by the fact that courts in twelve other states have simply adopted the holdings of the California Supreme Court as their own. This Article illustrates that in holding that benefits not yet earned are contractually protected, California courts have improperly infringed on legislative power and have fashioned a rule inconsistent with both contract and economic theory.","PeriodicalId":51610,"journal":{"name":"Iowa Law Review","volume":"97 1","pages":"1029-1083"},"PeriodicalIF":1.0000,"publicationDate":"2011-09-26","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":"14","resultStr":null,"platform":"Semanticscholar","paperid":null,"PeriodicalName":"Iowa Law Review","FirstCategoryId":"90","ListUrlMain":"https://doi.org/10.2139/SSRN.1933887","RegionNum":3,"RegionCategory":"社会学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":null,"EPubDate":"","PubModel":"","JCR":"Q2","JCRName":"LAW","Score":null,"Total":0}
引用次数: 14
Abstract
State and local retirement plans are underfunded by trillions of dollars, at a time when many states are facing decreased revenues and increased social needs. The result is that many states are currently giving active consideration to how best to address the problem of state and local pension plan underfunding given a state’s limited resources. In many states, however, courts have held that the statutes creating state retirement systems create contracts between the state and employee that prohibit the state from making any detrimental changes to the benefits provided to current employees within such systems, even on a prospective basis. This article examines the development of such a rule in California, a state that has been widely influential in this area of law, evidenced by the fact that courts in twelve other states have simply adopted the holdings of the California Supreme Court as their own. This Article illustrates that in holding that benefits not yet earned are contractually protected, California courts have improperly infringed on legislative power and have fashioned a rule inconsistent with both contract and economic theory.
期刊介绍:
Since its inception in 1915 as the Iowa Law Bulletin, the Iowa Law Review has served as a scholarly legal journal, noting and analyzing developments in the law and suggesting future paths for the law to follow. Since 1935, students have edited and have managed the Law Review, which is published five times annually. The Law Review ranks high among the top “high impact” legal periodicals in the country, and its subscribers include legal practitioners and law libraries throughout the world.