Plan Seeks To Require Voter Approval for Changes to Pension Benefits

On Thursday, pension-reform advocates introduced a plan that would require California to put any proposed pension and retirement benefit changes, including those for health insurance, to a public vote, the Sacramento Bee's "The State Worker" reports.

Details of Proposal

The plan was proposed by former San Jose Mayor Chuck Reed (D) and former San Diego council member Carl DeMaio (R). The measure also is backed by:

• Former Vallejo Vice Mayor Stephanie Gomes;
• Pacific Grove Mayor Bill Kampe (D);
• Former San Bernardino Mayor Pat Morris (D); and
• Anaheim Mayor Tom Tait (R).

Under the proposal, which seeks to cut rising retirement costs, "defined-contribution" plans would become the default retirement program for state and local employees hired after Jan. 1, 2019. Employers would need voter approval to add new workers to "defined-benefit" plans, which currently are common for government employees.

In addition, the plan would prevent:

• Government employers from paying more than 50% of retirement benefits without voter approval; and
• Lawmakers and government agencies from filing lawsuits or pursuing other actions to interfere with voter-approved ballot measures related to state employee compensation or retirement benefits.

Comments

Reed said the measure is necessary to reduce rising benefit costs that "crow[d] out funding for important services such as police, fire, schools and road repairs."

Richard Temple, a Republican campaign strategist, called the proposal "smart" because it is easy to understand in an environment in which voters have been concerned about pensions.

He said, "There's growing concern among groups and individuals about pensions and unfunded liabilities." However, he added that "any time you change the status quo, it's a heavy lift because you're up against people who benefit from the status quo."

Other supporters of the measure say it is necessary to avoid legal challenges and "bureaucratic appeals" that delay implementation of pension reforms.

DeMaio noted that the measure would "give voters a seat at the table" and "cut through the Gordian knot" of legislation that slow initiatives to cut costs.

However, the proposal has received strong criticism from opponents.

Bruce Blanning, executive director of Professional Engineers in California Government, said the measure's "real target is working men and women who dedicated themselves to public service and then retire."

Blanning noted that because unions view pensions as compensation, they should be bargained. As such, an attack on those benefits could spur challenges from labor unions.

He said, "Retirement benefits, including pensions and retiree health, are right up there with salaries when it comes to members' priorities" (Ortiz [1], "The State Worker," Sacramento Bee, 6/4).

CalPERS Reaction

In a statement issued Thursday, CalPERS criticized the measure and supported the "status quo," noting that "[c]omprehensive pension reform has already been enacted in California, and it is anticipated to save tens of billions of dollars."

CalPERS added that the plan "reduces benefits for new hires, and current employees are now contributing more each month toward their pensions than in the past" (Ortiz [2], "The State Worker," Sacramento Bee, 6/4).