Opinion

Public pension ‘reformers’ use workers as scapegoats

It occurs to me that the so-called “reformers” who want to overhaul public employees’ pensions are playing a game of Calvinball.

 

You remember that game, right? From the Calvin & Hobbs comic strip. The way to play Calvinball is to make it up as you go along. If you feel like you’re losing, you change the rules. If your opponent is advancing the ball, move the goalposts. If you find yourself backed into a corner, create an entirely new objective for the game.

 

That’s appears to be the strategy for those who are bloodthirsty to make public employees’ retirement benefits look more like corporate Wall Street money accounts. First, they blamed pensions for government’s budget problems. Then, they argued that converting defined-benefit plans into 401K accounts would save governments money. Now, they are pitching themselves as champions of fiscal transparency. So which is it? None of the above.

 

Using teachers, police officers, and garbage truck drivers as scapegoats for budget shortfalls didn’t pan out. Even in the most financially strapped cities, it quickly became clear that pensions weren’t the problem. San Bernardino filed for bankruptcy, but its pension costs represented only 4 percent of its budget shortfall. The same was true in Stockton, whose massive borrowing to build a lavish waterfront entertainment center caused that city’s money problems. Ed Mendel, a long-time political journalist who reports on California public employee pensions, pointed out on his Calpensions.com blog that pension obligations are far greater in other California cities and haven’t spurred bankruptcy filings.

 

With that argument debunked, pension critics began peddling the idea that governments would save money if they forced working class families into 401(k) accounts rather than pension plans in which retirement benefits are defined and predictable. But there’s a reason that 11 other states that studied such an option decided to reject it: converting pensions into 401(k)-like accounts will cost governments more than they are paying today.

 

Just ask San Diego. Voters there decided to hand public employees’ retirement accounts over to Wall Street and — lo’ — the city’s pension costs increased by $27 million for the coming fiscal year. Our state’s non-partisan legislative analyst agreed, saying pension changes made through the initiative process are likely to cost governments more, not less.

 

Now pension critics have turned to a new narrative — that the state is “hiding” its true pension costs and ought to come clean. That’s more than funny, it’s hypocritical. Across the country, organizations and individuals advocating for pension changes are being paid to do so by a man named John Arnold — a Texas billionaire from his days at Enron Corp. who’s bankrolling pension “reform” efforts from Kentucky to Illinois and Arizona. Arnold, however, has sought to hide his millions of dollars of donations to these efforts through 501(c)(4) organizations.

 

There’s another major flaw in the new “transparency” argument. Critics take a very narrow-focused snapshot of the California Public Employees Retirement System to argue that it unbalanced. They focus only on the few years during the national economic downturn and argue that the system’s performance is indicative of its overall health.

 

However, CalPERS just this month reported that it received a 13.3 percent return on its investments last year. If you consider CalPERS’ long-term performance, including the recent down years, it has averaged 8 percent returns over the past two decades. That shows a sound system that is bringing in enough cash to cover the costs of retirees’ benefits.

 

But it’s true that neither our economy nor our state’s public employee retirement system is out of the woods just yet. That’s why public employees — from teachers to firefighters to administrative workers — throughout the state have done and still are doing their parts in recent years by agreeing to concessions. And they are doing so in the appropriate venue: the bargaining table. Additionally, Governor Brown’s new pension rules kicked in this month and represent a reduction in benefits of $100 billion over the coming 30 years.

 

Californians have had enough of politicians and billionaires blaming working-class public employees for government’s problems. Statewide opinion polls show overwhelmingly that voters are satisfied with the changes in pension law signed by the Governor last year.

 

Nevertheless, the critics appear hell-bent on resorting to the rules of Calvinball and moving the goalposts again and again.

Ed’s Note: Martha Penry is a Special Education Para-Educator at Twin Rivers Unified School District.


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