Siding with transit worker unions, the Obama administration is threatening to derail Gov. Jerry Brown's attempts to reform California's public employee retirement systems.

U.S. Labor Secretary Thomas Perez warned in a letter to Brown earlier this month that pension changes state lawmakers approved last year make California transit districts ineligible for federal transportation funds.

Although the changes were designed to strengthen the state's financially strapped retirement systems, Perez says they violate federal transportation funding requirements by hurting transit workers' collective bargaining protections.

It's a mind-boggling misapplication of a law Congress passed in 1964 to ensure public transit agencies didn't bust unions as they acquired financially troubled private transportation companies.

Now, unless California lawmakers exempt transit workers from the pension changes, the feds could cut off up to $4.3 billion of transportation funding, according to an estimate by the California Transit Association.

That includes $174 million for BART, $225 million for Santa Clara Valley Transportation Authority and $12 million for AC Transit. Much of the money statewide would go toward the sort of shovel-ready projects President Obama touts to stimulate the economy and create jobs.


Advertisement

Brown "vigorously disagrees with the U.S. Department of Labor's legal opinion that California's landmark pension law impedes workers' collective bargaining rights," spokesman Jim Evans said Wednesday.

In his letter, Perez had given Brown a Friday deadline, but a U.S. Department of Labor spokesman said Friday morning that state and federal officials were seeking resolution to avoid the funding cutoff.

This is what happens when a federal agency uses laws written to address concerns a half-century ago to bolster a present-day political agenda. The Urban Mass Transit Act was passed in an era when public agencies were taking over private transit companies and labor unions had more clout in the private sector.

Congress was concerned then that the new public transit workers would lose rights they had gained in the private sector. So the law made federal transportation funding contingent on a Labor Department determination that labor contract benefits would be preserved and bargaining rights would continue.

To this day, the department vets transit agencies before transportation funds are released. In October, one month after the governor signed the state pension changes, the politically powerful Amalgamated Transit Union urged the federal government to cut off money for California.

The union argued that the pension law changes undermine their collective bargaining rights and agreements. From the onset, the Labor Department pressured Brown to strike a deal.

But the governor has correctly resisted. After all, once transit workers get a pass on pension changes, what does he say to other labor groups who want the same? Moreover, the federal government should not dictate how California regulates public retirement plans.

Finally, there's the law. As Brown notes, the state pension legislation does not infringe on collective bargaining rights nor affect current contracts. "To the contrary," he wrote, "it enhances retirement security for public employees by keeping pension plans from becoming unsustainable."

The changes were crafted by Brown and a labor-friendly Legislature to ensure that current employees' pension rights were not touched. If anything, the changes were timid, going only a short way down the path to true pension reform.

Then there's the irony. As Brown pointed out in a letter to the Labor Department, he was the governor who signed the 1977 bill granting collective bargaining rights to state employees. Perez had been labor secretary just two weeks when he issued his Aug. 1 letter threatening the funding cutoff.

Perez should tread carefully. Not only is he on shaky legal ground, there are many who say the federal law has outlived its time.

Even back in 1985, as a federal appeals court judge, Ruth Bader Ginsburg noted that, "Congress' apparent purpose in enacting (the federal law) was provisional -- to cushion the impact on transit employees of a change from private to public sector employment.

"It may be that, as years pass from the time of public takeover, it becomes more appropriate to align municipal transit workers with other municipal employees."

That is even truer today.

Daniel Borenstein is a staff columnist and editorial writer. Contact him at 925-943-8248 or dborenstein@bayareanewsgroup.com. Follow him at Twitter.com/borensteindan.