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Opinion: In Niello’s pension measure, the devil is in the details

A simple look at the ballot measure former Assemblyman Roger Niello filed last week shows that’s written almost as sloppily as the 2005 attempt to gut retirement benefits for police and firefighters that was laughed off the ballot.

Niello’s initiative begins with a catalog of alleged pension shortcomings drawn from a factually slapdash and glaringly unobjective report by the state’s Little Hoover Commission that was roundly criticized by State Treasurer Bill Lockyer and legislators for being unlawful and unworkable.

In this, Niello claims existing public worker pensions threaten the economic viability of state and local governments, failing to note that the state of California pays less as a percentage of payroll for pensions today than it did in 1980. And that the entire costs of pensions for state workers in 2011 will be $3.5 billion, barely 4 percent out of an $85 billion budget.

He also points to the supposed boogyman of $100,000 pensions, failing to consider that 98 percent of California’s public retirees have smaller pensions, and that the average public worker pension in the state is just $25,000 a year. Finally, in citing  claims that the California Public Employees’ Retirement System has a large liability he doesn’t reveal that these claims date from the depth of the Great Recession two years ago. Today, CalPERS is a healthy 70 percent funded and has earned back more than $70 billion of what it lost in the crash.

As to the core of the initiative: it would make 62 the lowest allowable retirement age for all future public workers, leaving us with the real possibility of gray-headed police and firefighters working well beyond their able years. Remember, such “safety” retirement was instituted for the public’s safety to ensure that those police and firefighters retired before age diminished their effectiveness and put the public at risk.

It is also surprising that an initiative written by a Republican would take away local control of pensions, setting this ironclad minimum retirement age and establishing a ceiling that would prohibit pensions from rising above 60 percent of a worker’s base salary.  Except for some wiggle room on retirement formulas, all of these pension rules will be statewide. Under this initiative local officials could not use pension benefits, say, as a way to encourage quality workers to move to undesirable areas. Talk about tying the hands of local government!

But you have to read all the way to Section 12d of the initiative for its real meat: an end to collective bargaining over pensions. This section would give public agencies exclusive authority over pension and other retirement terms and bar them from relinquishing “such authority in any employee contract or collective bargaining agreement.” These are much the same sort of union busting rules that Wisconsin Gov. Walker and his state’s Republican Legislature forced onto their public employee unions.

Meanwhile, via collective bargaining, California unions representing public employees have already negotiated significant savings both in the formula for how pensions are calculated and for what more employees pay into the pensions system each month.  Such negotiated changes saved the state more than $400 million in the last state budget alone.

Collective bargaining is also working to reduce pension costs for California’s cities. A just-released survey shows many cities have negotiated lower cost second pension tiers, employee-employer cost sharing, and moderated pension formulas. Niello’s initiative would make such agreements illegal.

The irony is that while collective bargaining is making workable changes to government’s cost for pensions, nowhere in Niello’s initiative is there anything that would create near-term cost savings. CalSTRS noted in its response to the Little Hoover Commission report that decades of court decisions treat pensions as contracts, which effectively prevents unilateral changes to the pension plans of current workers. The initiative would apply only to workers yet to be hired, putting any savings off well into the future. Collective bargaining – barred by this initiative – would be the most logical way to make workable nearer-term changes to pension costs.

Another ill-written section requires a 2/3rds vote by the Legislature to implement the provisions of this initiative, making it significantly more difficult to make needed changes to this new law than it would be to pass the entire state budget.

It is absolutely worthwhile to consider how to ensure that California’s public pension systems remain on a sound footing and able to provide a secure retirement for public workers. But this initiative plays upon the public’s fears and false charges of labor intransigence that have cast a dark cloud over public pensions. In fact, the changes that need to be made in pensions are being made right now at the bargaining table. It is a system that works fine. Let’s leave it that way.


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