State Legislature Passes Bill To Reform Public Worker Pensions
The legislation passed the Senate byÂ in aÂ 38-1 vote, and it cleared the AssemblyÂ in a 48-8 vote.
The bill now goes to Gov. Jerry Brown (D) for consideration (Ortiz, "The State Worker," Sacramento Bee, 8/31).
Details of Bill
The bill -- unveiled by Brown and Democratic lawmakers -- last week would:
- 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 bill would apply to most public workers. However, it would not affect employees of the University of California system or of charter cities with independent pension systems.
Altogether, the bill includes 10 of the 12 points included in Brown's original pension reform plan.
The bill 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 (California Healthline, 8/30).
Reaction to Bill's Approval
Senate President Pro Tempore Darrell Steinberg (D-Sacramento) said that the bill strikes a balance between preserving traditional public pensions and making them affordable for government employers (Ortiz/Sanders, Sacramento Bee, 9/1).
Assembly Speaker John PÃ©rez (D-Los Angeles) said the bill represents "meaningful, significant, historic [pension] reform" ("The State Worker," Sacramento Bee, 8/31).
Brown -- who is expected to sign the bill -- said the legislation represents the "biggest rollback of of public pensions in California history." He said, "This sweeping pension reform package will save tens of billions of taxpayer dollars and make the system more sustainable for the long term" (Herdt, Ventura County Star, 8/31).However, some Republican lawmakers said that the legislation is flawed and that they were pressured to take a position on it despite not being able to review the bill until the final week of the legislative session.
Other Republicans said the measure seeks to appease voters concerned with the state's fiscal situation ahead of the November election.
Diane Harkey (R-Dana Point) said, "This, to me, is a very insincere ploy to go out before the voters and say we did some pension reform, because you know how well that polls" (Sacramento Bee, 9/1).
Workers' Compensation Bill Passes
In related news, the Legislature also passed a workers' compensation bill (SB 863) on Friday (San Jose Mercury News, 9/1).
The bill -- by Sens. Kevin de LeÃ³n (D-Los Angeles) and Jose Solorio (D-Anaheim) -- would change the formula used to calculate benefits for injured workers, increasing their compensation by an average of 29%.
It also would eliminate benefits for certain health conditions that often are subject to lawsuits, such as psychiatric problems, sexual dysfunction and sleep loss (California Healthline, 8/29).
Headlines and links to broadcast coverage on the approval of AB 340 are provided below:
- "California Lawmakers Cut Pension Benefits for Public Employees" (Small, "KPCC News," KPCC, 8/31).
- "California Lawmakers Send Pension Reform Deal to Governor" (Quinton, "KXJZ News," Capital Public Radio, 8/31).