After a year of waiting, last week Governor Jerry Brown finally released his 12-point plan to address California’s massive unfunded pension liability.  With an estimated unfunded liability between $100 billion and half a trillion dollars, Governor Brown’s modest proposal seems to be headed in the right direction.  The proposal includes many of the reforms offered by the Little Hoover Commission, the Legislative Analyst’s Office, and legislative Republicans, such as increasing the retirement age, implementing a hybrid system, depoliticizing and professionalizing the CalPERS Board, addressing funding of retiree healthcare, and curbing pension abuses.

While the governor’s 12-point plan is a good start, if approved, the state will still face billions in pension liabilities using even the most conservative of figures.  Based on Governor Brown’s estimates, his proposal will result in approximately $900 million in savings annually, and $27 billion over 30 years.  To achieve the serious long-term savings necessary to bring fiscal soundness and sustainability to our pension systems, the state must go a lot further than what the governor has proposed.

However, the real challenge is whether the governor and legislative leaders will have the courage to stand up to the special interests and place the needs of 37 million Californians before their campaign coffers.  Without significant reform now, the fiscal state of our pension systems, local  and state, are in serious jeopardy.

Public employee unions have already have laid a foundation to oppose any serious reforms.  At a recent legislative joint conference committee hearing, union representatives repeatedly expressed their fervent belief that current pension systems are sound and sustainable; and that they have already sacrificed enough when they negotiated new contracts that saved up to $500 million—for a single budget year.  As Terry Brennand, an SEIU California Advocate, stressed at the hearing, “…the problem is not pension benefits or formula; it’s the over-reliance on the markets.”  As such, any changes to pension plans that do more than tinker around the edges will be strenuously opposed by public labor unions.

Regrettably, Democratic leaders in the Legislature are already aligning themselves with their union contributors to stymie any real reform.  Senate President Pro Tem Darrell Steinberg (D-Sacramento) has adopted the unions’ claim that “&hellipretirement should not be based on the ups and downs of what occurs [in the markets].”

With opposition from the Legislature’s majority party, the likelihood of any serious reform, or an agreement being reached, becomes tenuous at best.  As a result, if we are serious about finding real reforms and solutions that will be fiscally responsible, reduce our state’s unfunded liability, and protect retirement benefits for current and future employees, we will have to take the issue to the ballot.  If the Legislature refuses to act on such a modest proposal, it is doubtful they will take the steps necessary to address our massive unfunded pension liability.