News

Opinion: A pension-reform reality check

At first glance, Gov. Jerry Brown’s 12-point package of pension reforms, released two weeks ago, looked like a deft political play. It won gushing support from editorial writers across the spectrum. The Wall Street Journal equated it with Nixon going to China. And predictably, it was trashed by labor on the left as too strong and bashed by the uber-right as not going far enough.

But for the long haul, Brown may have negotiated against himself. His new set of proposals goes beyond those that Senate Republicans wanted this past spring in exchange for budget votes. So count on this: If Brown’s ambiguous measures are modified by the Legislature (and even the LAO’s tightwads suggested alterations), then the ever-cranky GOP will have an excuse to withdraw their support. Brown will have left himself open to criticism that he’s caved, meanwhile seriously harming his relationship with his labor allies.

Nobody will dispute that labor has a fight on its hands to protect retirement security for the state’s public workers from assaults. The latest PPIC and Field polls show strong bipartisan support to rein in pension benefits among all demographic groups – even among public employees themselves.

No wonder. Not a day goes by without a screaming headline about pension abuse. Publishing databases of public workers’ pensions become a goldmine to drive up click rates for newspaper websites. The “$100,000 Club” – representing less than 2 percent of the state’s retirees – secures about 98 percent of media coverage.

Which leaves Brown’s triangulation-happy advisers hoping that labor will simply cave on the issue, give the governor a pass and then hop on board any measures he’ll propose for the November ballot that he views as more important to unions and the Democratic agenda. Central to this reasoning is their reckoning that labor won’t risk a ballot measure that goes even further than what the governor has proposed.

They liken this strategy to 2004 workers’ comp reforms. As Capitol observers can recall, the Legislature buckled under Gov. Schwarzenegger’s threat of a ballot measure that year that would have been stricter than what labor was able to negotiate. The Democratic Legislature grudgingly passed modest tweaks to the state’s workers’ comp system, averting the ballot initiative.

But let’s take a walk down memory lane. In 2004, the ballot initiative proposal threat had a champion in a newly-elected popular governor. Schwarzenegger made it his signature issue, stumping up and down the state. There were big bucks behind it, including the full weight of the California Chamber of Commerce. Moderate Dems, under pressure from their own small business allies, didn’t need much convincing to go along with reforms. After all, not a single constituent would likely complain: The changes being proposed wouldn’t have affected the current benefits of a single worker, only impacting future claims.

Compare that to the pension proposals, which will affect millions of Californians with a vested interest in their defeat. Hell hath no fury like a voter who will see his paycheck slashed and retirement put in jeopardy or voters who might be concerned if when they call 9-1-1, their call is responded to by a 67-year-old police officer.

None of the six measures filed thus far reflect Brown’s plan. All of them are more extreme. And the governor didn’t seem too excited about going to the ballot. Clearly, he has bigger fish to fry.

Only one of the measures appears to be semi-serious. Announced last week, it has the backing of former GOP Chairman Duf Sundheim and two Capitol insiders, former Schwarzenegger Finance Director Mike Genest and Dan Pellissier, a former aide to Republican Assemblyman Keith Richman.

These aren’t exactly political heavyweights: Sundheim’s tenure as GOP chair was marked by weak fundraising, the loss of all of the state’s major statewide offices and a decline in the number of legislative seats. Pellissier’s only political experience is a previous anti-pension proposal that died a quick death after it excluded death benefits for widows of police and firefighters; Pellissier also stuffed his benefits before leaving the EPA, including purchasing “airtime.” And Genest is particularly vulnerable as a poster child of what’s wrong with the state’s pension system; a Capitol Weekly expose of his $125,549 annual pension noted his final year payout for 2009 was $211,788 after he was paid for unused leave time. His defense? “We could have made a lot more money in the private sector. We are making more money.” We’ll keep that one handy in our op research file.

On their press conference call last week, the three admitted they’ve raised just $250,000 in the six months they’ve been working on their proposals. And while it’s clearly sympathetic to the union-bashing cause of pension busters, business has zero interest in backing their campaign.

So what should labor do? Find a third way, charting a course between head-in-the-sand obstruction and rolling over to the governor’s wishes.

According to the Department of Personnel Administration, the increases vary by bargaining unit, but most state employees’ pension contributions have gone from 5 percent of their pay to 8 percent. For correctional officers, it went from 8 percent to 11 percent. California Highway Patrol went from 8 percent to 10 percent. For assorted groups that include doctors, psychiatric technicians, craft and maintenance workers, and social workers, their pension contributions doubled (from 5 percent to 10 percent or from 6 percent to 11 percent if they work with inmates).

That’s on top of furlough days, hiring freezes, layoff threats and increased workloads. And that’s not all. State public employees agreed to reduce the pension formula for new state employees and to changes that curb “spiking.”

At the local level, at least 200 California cities, counties and local districts, firefighters, police, and other public employees have agreed to increase employee pension contributions and lower public costs. These aren’t token giveaways.

They include firefighters, police officers, clerks, traffic workers and many more agreeing to pay more toward their retirements, adding new pension tiers and reducing pension formulas.

Given everything unions have done so far and their willingness to negotiate further, labor would be nuts to roll over and play dead for Gov. Brown.


Support for Capitol Weekly is Provided by: