Few pension reformers will blame Governor Jerry Brown for agreeing to support the federal government’s demand to temporarily exempt union transit workers from the pension reforms he championed. The standoff between the governor and the Obama Administration’s Labor Department over transit funds and pension reform was spelled out by the State Budget Solution’s Bob Williams last week in F&H. The bottom line for the state: Lose billions of dollars in transit funds or pull back on the requirements that transit workers donate to their pensions and that new hires work longer before retirement.
While Brown will take the money, he also will take his fight to court against the half-century old law that the Obama Administration is relying on to force the issue.
Another thing he should test in that court battle is the strength of federalism.
The situation is another sign that states are losing rights said Jack Dean, editor of the website Pension Tsunami, which closely monitors activity related to pension reform.
Dean agreed that the governor should not be blamed for backing off. He said he expected local governments were pushing the governor, saying they needed the transit money.
However, Dean said, “The unions we can blame.”
While union officials convinced the Obama Administration to take a hard line with California, Dean believes public unions constantly working to block pension reform will make matters worse for their members.
“What we have (in pension liabilities) is unsustainable. If workers are not willing to give up something, matters will only get worse.”
Dean emphasized that the goal of pension reformers was not to steal pensions. “The goal is for public workers to receive the pensions they deserve,” he said.
He pointed to a Rhode Island situation in which pensions were cut in half because timely reforms were not made. He said the municipal bankruptcies in California are more warning flags that something must be done to reform the system because public workers pay the price for inaction.
For now, Dean worries about the positive moves in pension reform being disrupted by stubborn union opposition. He said the voter-approved reforms in San Jose and San Diego were meant to save the pension system for public workers. Instead, unions are challenging those reform measures in court.
Now the Labor Department stalls a state pension reform — but the pension liability remains a dark cloud on the horizon for both governments and the workers who are looking forward to their pensions in retirement.