Whats Next for Pensions?
Public employees have the most at stake in the discussion about the health of public pension systems. That’s why, despite the measure proposed by San Jose Mayor Chuck Reed being pulled from the November statewide ballot, public employees will remain actively involved in the conversation. We’re not celebrating. Neither are we shying away from this […]
Who Will Benefit From Chuck Reed’s Pension Plans? Lawyers, Not Taxpayers
While San Jose Mayor Chuck Reed preaches fiscal responsibility as code for statewide pension overhaul, his own city is racking up millions of dollars in taxpayer-funded legal fees as a result of his pension bashing plans that have ended up in court. This week, taxpayers ponied up nearly another $1 million this week to defend Reed’s blatantly […]
The Pension Debate Isn’t Just About the Public Sector
Nearly one-half of California workers will face significant economic hardship in retirement, living on incomes that are less than double the federal poverty threshold. That is one of a number of disturbing but well-documented predictions in Meeting California’s Retirement Security Challenge, a report just released by UC Berkeley Center for Labor Research and Education. The […]
Costa’s Pension Initiative: Devil is in the Details
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:
A Reality Check in California’s Pension Discussions
It is absolutely worthwhile to consider how to ensure that California’s public pension systems remain on a sound footing and able to provide a secure retirement for public workers.
But issues about the cost/benefit of public employee pensions have become a major point of contention in the heated debate on how to fix California’s state budget problems. Pension-spiking poster children, manufactured data supposedly showing huge unfunded liabilities and false charges of labor intransigence have cast a dark cloud over public pensions.
For instance, a common claim is that pension costs will bankrupt state government. In fact, the entire costs of pensions for state workers in 2011 will be $3.5 billion, barely 4% out of an $85 billion budget. Add CalSTRS and the total is not even 6% of the budget. If we paid zero into public employee pensions and eliminated them altogether, we would not come close to solving the budget deficit.
In fact, the state of California pays less as a percentage of payroll for pensions today than it did in 1980. Meanwhile CalPERS has earned back more than $70 billion since the financial crisis and the system’s funding status is estimated near 70 percent.