Don’t Be Fooled by Meager Pension Reform

Dan Pellissier
President of California Pension Reform

Yesterday, the non-partisan group State Budget Solutions released a report showing that California state government is $617 billion in debt, much of it due to unfunded pension and retiree health benefits.  Clearly, California needs strong pension reform measures to solve the math problems that will plague budgets for decades to come.  Yet voters should not be fooled into thinking the problem will be solved by the meager improvements promised by Governor Brown and legislative leaders.  There is much, much more work to be done.

Earlier this year the Governor sent the Legislature his 12 point reform plan that was a good first step towards reining in budget busting pension costs and providing retirement benefits that are fair for employees and taxpayers.  Of course it got mugged in a back room by the special interests and it was stripped of its most meaningful provisions.

Gone are his hybrid plan, a 67 year full retirement age, and more independent pension boards.  What remains is a repeal of the small change abuses like spiking, retroactive benefits, airtime purchases, double dipping and pensions for felons.  They kept the easy stuff that saves little money and ditched the policies that would have helped reduce unfunded liabilities.  The cap on pensionable pay exempts 95% of government employees.  Raising the retirement age by two years for new employees saves very little money.  Of course experts will need time to carefully review the legislative language to ensure the bill does what they say and does not include any hidden giveaways or special exceptions commonly snuck into last minute legislation.

Sadly, Californians do not really know how much money the pension bills would save because the legislature has not complied with its duty under state law (Government Code Section 7507) to have a full actuarial report on the proposed changes publicly available before voting on the measure.  You can be sure if politicians had hard numbers supporting their over-hyped claims to big savings, they would not be hiding them today.  Their failure to follow this important public right to know law raises serious legal questions about the measure.

Last night, Conference Committee members Assemblyman Silva and Senator Walters earned special credit for publicly criticizing the secret committee process, that after 10 months of hearings delivered bill language to Republicans at 5:00 pm on the last possible day.  Senator Walters also asked about the legally required actuarial report and was told none was required.  Evidently the Legislature ignores inconvenient laws.

Secret negotiations, last minute votes and lawless behavior are no way to convince voters that meaningful pension reform is at hand.  California needs a statewide pension reform initiative to finish the job.  San Diego and San Jose voters proved the public is ready for very strong pension reform.  Hopefully Governor Brown will join the business community and pension reformers help finish the job.

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