Initiative
gadfly Ted Costa is trying to get a Pension Solvency Act initiative on
the ballot he claims would deal with pension spiking and create a
secure, state-run pension plan for private sector workers. But onerous
as pension spiking is, it is a problem that Costa himself admits affects
only a tiny minority of public retiree pensions and one that is already
well on its way to elimination at the state and local level via
collective bargaining. And the Legislature has already killed as perhaps
desirable but impossibly unworkable a proposal to create a
CalPERS-managed private pension scheme almost identical to the one Costa
wants.
Even Wylie Coyote and Rube Goldberg would be awed by the convolutions
and outright gobbledygook of Costa’s initiative, which at 8,100 words
plus three appendices is a gargantuan mess that would:
- Create
a vast and costly new bureaucracy at CalPERS and the Office of the
State Controller to review the funding levels of every public pension
plan in California and adjust the size of every individual future public
pension. - Call
upon the US Attorney in San Francisco to open a criminal investigation
into every public worker receiving a large pension, probing such
retirees for everything from conspiracy to commit fraud and extortion to
violations of the Racketeer Influenced and Corrupt Organizations (RICO)
Act. - Cripple
CalPERS by forcing it to break up its investments into individual funds
for each of its public employers. From its present position as the
largest public fund in the US, CalPERS would be broken into more than
3,000 much smaller funds, each independently administering its own
investments. - Create
a one-size-fits-all minimum retirement age of 59 and-a-half for every
public jurisdiction in California, regardless of their individual needs. - Require
an ongoing series of pension plan solvency tests so complex and
burdensome they would make the Prop 98 formulas for school funding look
like child’s play.
As
to the creation of a private sector pension plan within CalPERS, the
Legislature looked at that idea in 2008 when it debated and ultimately
killed AB 2940, which would have created just such a plan. Laudable as
the idea was as a way to increase retirement security for private sector
workers, it died in large part because it would have put CalPERS tax
exempt status in jeopardy. Not to mention creation of whole new state
and CalPERS bureaucratic structures to construct and manage the new
plan.
Finally, while stating in the opening declarations that one of its goals
is to tame retiree health care costs, Costa’s initiative has no
provisions for any new retiree health care efficiencies or cost savings.
The sole significant change here would be to allow CalPERS to contract
out health services for retirees who live out of state or abroad,
contracting for instance with the “arm (sic) forces to provide medical
coverage … traveling or living outside California our outside the United
States.”