Gov. Brown Signs Legislation Reforming Public Pensions

On Wednesday, Gov. Jerry Brown (D) signed into law a bill (AB 340) that reforms the state's public pension system, the Sacramento Bee's "Capitol Alert" reports.

In a statement, Brown said that the bill represents "the biggest rollback to public pension benefits in the history of California pensions" (Rosenhall, "Capitol Alert," Sacramento Bee, 9/12).

Brown said that the bill is "not perfect" but is "as bold a step as the process would allow." He added that more changes to the public pension system "will be proposed" when they are needed (McGreevy, Los Angeles Times, 9/13).

Bill Details

The pension reform law -- developed by Brown and Democratic lawmakers -- will:

• Require all current and future public workers at every level of government to pay at least 50% of their pension costs;
• Increase the retirement age by at least two years for future public workers; and
• Cap the amount of future public workers' salaries that can go toward their pensions at $110,000 for those participating in Social Security and $130,000 for those not participating in the program.

The law will apply to most public workers. However, it will not affect employees of the University of California system or of charter cities with independent pension systems.

Altogether, the law includes 10 of the 12 points included in Brown's original pension reform plan.

The new law does not include the centerpiece of Brown's original plan, which was a requirement that new workers have a significant portion of their retirement money placed in 401(k)-style accounts.

The requirement would have shifted more financial risk from the state to workers. CalPERS said that the law will save between $42 billion and $55 billion over 30 years, while the California Teachers' Retirement System estimated its savings at $22.7 billion over 30 years (California Healthline, 9/11).

Reactions

Labor union officials said that AB 340 is an attack on retirement security and collective bargaining (Los Angeles Times, 9/13).

Willie Pelote -- spokesperson for the American Federation of State, County and Municipal Employees California -- said that Brown "made his disdain for a secure future for public employees crystal clear" when he signed the bill. Pelote added, "AB 340 was flawed legislation that failed to take into account the massive concessions that public employees across California have made to balance budgets at the state and local level."

In a statement, SEIU Local 1000 President Yvonne Walker said, "We believe that, in the long-run, the solution to the retirement crisis is to expand retirement security for all workers -- public and private -- not whittle away at the pensions of teachers, nurses, analysts, auditors and water quality personnel."

Meanwhile, certain pension advocacy groups said that AB 340 does not do enough to curb funding shortfalls in the state's public retirement systems (Ortiz, "The State Worker," Sacramento Bee, 9/12).

Dan Pellissier -- president of California Pension Reform -- said the pension reform law is "a meager reform that falls far short of solving California's brutal pension math problem" (Los Angeles Times, 9/13).

However, San Diego County Supervisor Greg Cox praised efforts to reform the state's public pension system. He said, "Clearly, something had to be done."

Cox said that a more uniform statewide approach to pension benefits "makes sense." He said, "Now you have a hodgepodge of different retirement programs. Consistency will make it easier to retain good employees and attract new ones" (Gardner, U-T San Diego, 9/12).

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