Pensions
Copyright Sutter County Taxpayers Associations 2011 © SCTA
Content of this site may not be used or reproduced without expressed written consent
Our View: Union clamor can't muffle need for pension reform
Appeal-Democrat staff report
2011-05-11 16:42:59
Union activists are marching on the state Capitol and have launched a public relations blitz to convince the public that efforts to
rein in out-of-control pension costs for public employees amount to an effort to demonize government workers. As liberal activist
Steve Maviglio put it, "Pension reform is a Trojan horse for an attack on public employees." Yet respected sources ranging from
Stanford University to the watchdog Little Hoover Commission continue to paint a bleak picture of a growing pension debt that
threatens to swamp government budgets and result in crushing tax increases.
A new report commissioned by Californians for Fiscal Responsibility, released Thursday, adds to the alarm: "The combination of
retroactive benefit enhancements, lengthening lifespan and some weaker-than-expected investment returns during recent years
has led to deterioration in the condition of public funds in California. As of 2010, the five largest public pension systems are only
between 61 percent and 74 percent funded for benefits earned for past service, based on the actuarial assumptions used by those
systems. These measures would be even lower if they instead reflected the assumptions mandated for use by private sector
plans," the report stated.
This latest study shows not only significant disparities between private sector and richer public sector pensions, but also among
public employee unions, with teachers receiving less than prison guards, as the Orange County Register reported Friday.
Former Assemblyman Roger Niello, speaking Thursday at a Pension Boot Camp in the Sacramento area, where the study was
released, argued that government employees themselves must embrace pension reform given that they must "depend on the
sustainability of a system that is not sustainable." Yes, at some point the unions must end the theatrics and embrace real,
significant reform — not just the nibbling-around-the-edges reforms that won't fix the problem and are designed mainly to reduce
public attention to the issue.
The Legislature and Gov. Jerry Brown have embraced only the most superficial pension- and government-employee reforms. In
fact, Brown just negotiated a shameful pact with the powerful prison guards union that will vastly expand their benefit levels by,
for instance, allowing members to "bank" an unlimited amount of vacation time. Democrats have been arguing that pension
problems can be fixed at the negotiating table. But it's at that table where the problem was created, as unions use their political
muscle to elect their own bosses — the local and state lawmakers who approve their compensation packages.
In California, serious reform can only come through the initiative process, given the heavy leftward tilt of the Legislature and
executive branch. Two initiatives are moving forward that have some promise. One, offered by Niello, would ban retroactive
pension increases, limit retirement benefits to 60 percent of the employee's highest base wage over three years (rather than the
final year), and would require the employee to contribute to their plan. Another initiative would create a hybrid system that
combines a 401(k)-style program with a smaller defined-benefit plan.
We'll examine these initiatives in more detail as they move forward. But the factual case keeps getting stronger. The pension
system for public employees is out of whack, and significant reform must come sooner rather than later — regardless of the
emotional case made by unions.
Copyright Sutter County Taxpayers Associations 2011 © SCTA
Content of this site may not be used or reproduced without expressed written consent
Our View: Union clamor can't muffle need for pension reform
Appeal-Democrat staff report
2011-05-11 16:42:59
Union activists are marching on the state Capitol and have launched a public relations blitz to convince the public that efforts to
rein in out-of-control pension costs for public employees amount to an effort to demonize government workers. As liberal activist
Steve Maviglio put it, "Pension reform is a Trojan horse for an attack on public employees." Yet respected sources ranging from
Stanford University to the watchdog Little Hoover Commission continue to paint a bleak picture of a growing pension debt that
threatens to swamp government budgets and result in crushing tax increases.
A new report commissioned by Californians for Fiscal Responsibility, released Thursday, adds to the alarm: "The combination of
retroactive benefit enhancements, lengthening lifespan and some weaker-than-expected investment returns during recent years
has led to deterioration in the condition of public funds in California. As of 2010, the five largest public pension systems are only
between 61 percent and 74 percent funded for benefits earned for past service, based on the actuarial assumptions used by those
systems. These measures would be even lower if they instead reflected the assumptions mandated for use by private sector
plans," the report stated.
This latest study shows not only significant disparities between private sector and richer public sector pensions, but also among
public employee unions, with teachers receiving less than prison guards, as the Orange County Register reported Friday.
Former Assemblyman Roger Niello, speaking Thursday at a Pension Boot Camp in the Sacramento area, where the study was
released, argued that government employees themselves must embrace pension reform given that they must "depend on the
sustainability of a system that is not sustainable." Yes, at some point the unions must end the theatrics and embrace real,
significant reform — not just the nibbling-around-the-edges reforms that won't fix the problem and are designed mainly to reduce
public attention to the issue.
The Legislature and Gov. Jerry Brown have embraced only the most superficial pension- and government-employee reforms. In
fact, Brown just negotiated a shameful pact with the powerful prison guards union that will vastly expand their benefit levels by,
for instance, allowing members to "bank" an unlimited amount of vacation time. Democrats have been arguing that pension
problems can be fixed at the negotiating table. But it's at that table where the problem was created, as unions use their political
muscle to elect their own bosses — the local and state lawmakers who approve their compensation packages.
In California, serious reform can only come through the initiative process, given the heavy leftward tilt of the Legislature and
executive branch. Two initiatives are moving forward that have some promise. One, offered by Niello, would ban retroactive
pension increases, limit retirement benefits to 60 percent of the employee's highest base wage over three years (rather than the
final year), and would require the employee to contribute to their plan. Another initiative would create a hybrid system that
combines a 401(k)-style program with a smaller defined-benefit plan.
We'll examine these initiatives in more detail as they move forward. But the factual case keeps getting stronger. The pension
system for public employees is out of whack, and significant reform must come sooner rather than later — regardless of the
emotional case made by unions.
