The negotiated change in the pensions for four public employee unions announced by Governor Arnold Schwarzenegger is a good first step in fixing a major component of California’s fiscal problems.

The deal negotiated by the governor and four unions representing 23,000 workers is like slowing a portion of that Gulf oil leak, but not stopping the flow all together. There are hundreds of thousand of more public workers who must agree to reforms. Other unions falling in line would stem the flow of red ink leaking from the budget.

The proposal, which still needs rank-and-file member approval, increases payments made by current union members toward their retirement from 5% to 10%; determines a worker’s pension benefit based on the three highest salary years instead of just one; and requires retirement age to increase by five years for new hires.

While a negotiated settlement is good, statutory changes to the pension law are still needed. As Republican Senate Leader Dennis Hollingsworth noted in a press release commending the governor and unions over the tentative pact: "While the agreements will provide immediate and long-term savings to taxpayers, there are statutory changes that still need to be made to ensure there is not an incentive for a contract impasse in the future."

Democrats in the legislature have been arguing that negotiation with the unions is the way to deal with pension rules, not legislation. This ignores the fact that California’s public pension problem spiraled out of control because of a bill passed by the legislature and signed by Governor Gray Davis a decade ago.

Another bill is necessary to change the course the state set for pensions with SB 400 in 1999.

The quest for legislative pension reform will stall with the news of this negotiated settlement. But, it can pick right up again if other unions refuse to follow the example of the unions representing Highway Patrolmen, Forestry Firefighters, Psychiatric Technicians and one of two units of the American Federation of State, County and Municipal Employees.

The pension changes are an important victory for the governor over a major item on his to-do list before leaving office. It will still the "lame duck" chatter for now.