Thursday, October 27, 2011
California Governor Jerry Brown thinks most public pension systems in the state could use an overhaul. He’s proposing a plan that would trim pensions and save government money.
SACRAMENTO, Calif. Governor Jerry Brown wants to see his 12-point plan on the ballot in November 2012. In a news conference today, Brown said, at a minimum, state, local and school pensions would have to abide by his plan.
The plan would require current employees to contribute more to their pensions, but Brown’s main focus is on new employees. It has requirements such as a hybrid 401(k) pension plan, calculating pensions by using only base pay and increasing the retirement age.
Brown said he believes the law limits how much the benefits of current employees can be changed.
"I do think some cities will experiment in this area," he said. "And I think over the next few years we’ll have a greater and clearer definition of what can be done regarding current employees."
According to a statement from Brown's office, the pension reforms will roughly halve the cost to taxpayers for providing pension benefits for state employees. The statement said similar savings are expected across all systems.
San Diego is already in the middle of a debate over pension reform. Councilman Carl DeMaio is backing a proposal that would eliminate pensions for most new city hires, but it would also redefine how much of a current employee’s compensation can count toward a pension. Base pay for current San Diego city employees would also be frozen for five years. DeMaio said the proposals meets legal requirements.
"It took us a while before people realized, not only can you reform current employees pension benefits, but if you don’t you don’t fix the problem," he said. "And unfortunately that’s kind of where the governor is right now."
Local unions have denounced DeMaio's plan. Public employee unions already were lining up to oppose Brown's proposal, which the administration estimates would save about $900 million annually.
Dave Low, chairman of Californians for Retirement Security, said the governor's proposed changes would undermine retirement security for public employees who have already agreed to "hundreds of millions of dollars in pension concessions at the state and local level."
"Workers across California have negotiated contributing more to their pensions and two-tier benefits," Low said in a written statement. "We simply cannot stand for imposing additional retirement rollbacks on millions of workers without bargaining."
Brown's plan would require approval from the Legislature, where union-allied Democrats are likely to balk at some of the significant rollbacks, and where Brown failed to win consensus on pensions with Republicans last spring.
The Associated Press contributed to this story