Schwarzenegger Delays Proposal To Reform State Pension System
Gov. Arnold Schwarzenegger (R) on Thursday delayed until at least June 2006 a proposal to privatize the pensions of public employees, a reversal considered a "victory for his opponents," the San Francisco Chronicle reports (Gledhill, San Francisco Chronicle, 4/8). The proposal, which Schwarzenegger planned to introduce as a ballot measure in a special statewide election this year, would have affected guaranteed pension benefits for nurses and other state employees hired after July 1, 2007. Those employees would have received investment accounts similar to 401(k) plans (California Healthline, 3/23).
Schwarzenegger began to promote the proposal last January, when he called pensions "another government program out of control" (Williams Walsh, New York Times, 4/8). Schwarzenegger on Thursday said that he will seek an alternative proposal to reduce costs for the state that would not affect the death and disability benefits of public employees. Schwarzenegger aides this week distributed to public employees a two-page document that outlines a series of potential reforms to the state pension system (Hinch, Orange County Register, 4/8).
At a news conference in Sacramento, Schwarzenegger said that public employees had raised concerns that the original proposal could affect their death and disability benefits and that he did not want the "pension reform debate to be clouded by worries surrounding this issue" (San Francisco Chronicle, 4/8).
Opponents of the original proposal said the shift to individual investment accounts from guaranteed benefits for public employees would prove "less secure for retirees" and "weaken the investment power" of the state pension system, the San Diego Union-Tribune reports (Mendel/Marelius, San Diego Union-Tribune, 4/8). According to an analysis conducted by Attorney General Bill Lockyer (D), the proposal would have eliminated death and disability benefits for public employees (Nicholas, Los Angeles Times, 4/8).
The decision by Schwarzenegger to abandon the original proposal "may be the most encouraging thing to happen in Sacramento this year," according to a Los Angeles Times editorial.
The editorial adds, "With luck and political will, this concession will lead to negotiation of other Schwarzenegger plans and eliminate the need for a costly and contentious special statewide election this fall" (Los Angeles Times, 4/8).
CPR's "KXJZ News" on Thursday reported on the Schwarzenegger decision. The segment includes comments from Schwarzenegger and Senate President Pro Tempore Don Perata (D-Oakland) (O'Mara, "KXJZ News," CPR, 4/7). The complete segment is available online.This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.