Public pension reform gaining traction

April 20, 2012

By DANIEL BLACKBURN

As a subject of general discussion, California’s skyrocketing public pension situation has come a long way in a very short time, one of the state’s leading authorities on the subject said Thursday.

Marcia Fritz, president of the California Foundation for Fiscal Responsibility (CFFP), told a gathering of business and property owners that despite the greater interest, public pensions and benefits in this state are proving particularly difficult to impact, even in an economic crisis. CFFP is a statewide organization advocating for public pension reform.

“The issue of public pensions has engaged the people of California like no other issue,” Fritz said at a meeting of the San Luis Obispo Property and Business Owners Association at Cafe Roma.

“This problem has been around for a long time, and we’ve barely scratched the surface.[Governor Brown] knows it, he gets it, and he has proposed a 12-point pension reform plan which he knows is critical for his tax proposal,” said Fritz. “If he can’t show that there has been movement by labor to make comprehensive cuts in California, the governor’s (proposed) tax increase will suffer.”

But she predicted Brown’s pension reform plan “will pass overwhelmingly. This will be good for fiscally stressed cities. A statewide pension reform will help a lot of cities.”

San Luis Obispo County is one of 248 California agencies (out of 1,600 public agencies) that has reformed their pension plans in recent years.

Further complicating the matter for voters here is the fact that California is the only state in the nation that allows pension benefits to be negotiated at the bargaining table. It’s also the only state with constitutionally-protected public pensions and benefits, which makes it exceedingly difficult to make progress in reform, said Fritz.

“Many of those in management who negotiate these contracts are also negotiating for themselves, and that is not right,” she told the group.

“It’s a cookie cutter system — [there are] 12 different formulas, three or four dozen optional plans — every time labor sits down with management, they just go through the Sears catalog of products and pick them, one by one, and the result is they have been getting their benefits enhanced regularly. And once those benefits are enhanced, our state constitution makes those a vested right.”

That means those pension levels and benefit packages “cannot be taken away” and never altered, changed, or lowered.

It’s a different situation in the rest of the states, authorities of which can appeal to federal courts for relief.

Fritz said that federal judges have “generally” been ruling in favor of managers of debt-ridden agencies, by first eliminating retirement health coverage, then cost of living increases for retirees.

“That’s what’s going on in other states,” she said, but existing constitutional protections mean California courts have no say in the matter, she noted.

Fritz believes that a better system of reporting of pension plans would be a step in the right direction.

“The system has been so abused, that the only way I can figure a fix is by putting the real costs before the public,” she said. “If people could go to [their local agencies’] website and see what’s really going on,” significant change might be possible.

And changing the constitution will not impact current plan holders.

“If we don’t enjoy a real upswing in the economy, it going to be really, really painful” for California agencies and, ultimately, taxpayers,” she said. Benefit enhancements already promised will have to be borne by taxpayers.

Fritz lauded county managers for their efforts in pension reform.

“I’m very impressed with what the county is doing,” she said. “ But the city of San Luis Obispo has not gone far enough. Their current plan has only achieved a 43 percent reduction in the goal, and that is not good enough. If certain factors do not come into play, [the city] will face serious financial problems.”

Unions in this state have regularly opposed any plan to require employees to pay half of their retirement costs while working. And that, she said, is contributing to public dissatisfaction with the way things are being done.

“Unions are going to hurt, because they know that people support the idea [of public pension reform], and if the unions fight it, they will not have any hope of tax increase. And people are inflamed. They do not like the $100,000-pension club — there are 22 from the city of San Luis Obispo, and that’s a lot, and it’s growing.”


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40 Comments

  1. justme says:

    Too late, it’s been established that pensions are previous earnings not to be negotiated away. Cough it up Mr. & Mrs. taxpayer.
    I don’t remember being asked to support myself AND everybody else upon getting old.
    As the swamp drains the stink reins.

    (7) 9 Total Votes - 8 up - 1 down
  2. viamagnolia1 says:

    Just go to the Paso Robles City Web Page and bring up Resolution 11-119 approved in September 2011. We are very generous with our City Employees. We have given them everything but the SUN< MOON AND STARS. This is Paso Robles attempt a "Pension Reform".
    Come on Paso, you have a fat layer of cuts to make. Just do it.

    (17) 19 Total Votes - 18 up - 1 down
  3. viamagnolia1 says:

    You can go to Paso Robles Webpage and search for Resolution 11-119. It was signed on September 6, 2011. Itt is over 80 pages but it promises good reading. We have given everything to City Employees. The only thing we have NOT given them is the SUN< THE STARS< AND THE MOON.
    If you get outraged easy, this is not the doument to read.

    (12) 14 Total Votes - 13 up - 1 down
  4. womanwhohasbeenthere says:

    The SLO Property and Business Owners Association is the only group really fighting city hall over outrageous spending and stupid policies. They have a mixer at Mother’s next month sometime. Anyone who is concerned about the direction our fair city is going – toward a bankrupt police state – should join this group.

    (19) 21 Total Votes - 20 up - 1 down
    • TheBeachBum says:

      It’s obvious to me that we have a serious oversight problem in government at all levels. The people at the City have no real `alliance’ with the average taxpayer.. They work with one another daily and probably socialize with each other frequent;y. They grant each other fat salaries, bonuses and pensions w/ no one to say otherwise.

      I’ll OK your compensation package, if you don’t bring up mine.

      In many local pension negotiations, the employees who supposedly represent that taxpayer are actually members (or at least ex-members) of the union that sits at the other side of the negotiating table. They have every incentive to negotiate a deal that improves their benefits regardless of what it means for taxpayers. These negotiations are done in closed session, so the public rarely learns about the deals until it’s almost too late to organize to stop them. The City council members and County supervisors love to gain the union endorsements and to pose next to the squad cars and fire trucks. The average citizen hardly has a chance.

      (23) 25 Total Votes - 24 up - 1 down
    • The Gimlet Eye says:

      A good place to go for info on pensions is: http://www.pensiontsunami.com/

      (8) 8 Total Votes - 8 up - 0 down
  5. slo Fact Finder says:

    Sally, your short comments really summarized our statewide and local problems clearly. Now what ?

    (11) 11 Total Votes - 11 up - 0 down
    • Sally says:

      First thing is do a salary and benefit review of comparable pay to local private business and all new hires would get like benefits and salary, 401k ect
      An example is in the county there are no clerks they are all called exec, assistants so to increase the pay.
      The second is to make all existing pensions start at age 65.
      The SLO PD should look to contracting with the Sherrifs department or get bids from outside contractors.
      Repeal the “Prevailing wage law”

      (16) 22 Total Votes - 19 up - 3 down
  6. hijinks says:

    Per usual, the right wingnuts at CCN are out to lunch on this. The story is total BS by a factorum of a rich business group — good grief, they had their “lunch” meeting to listen to this junk at the most expensive restaurant in SLOtown.

    For example, she states: California’s “also the only state with constitutionally-protected public pensions and benefits.” This is poppycock, since the “constitutional” protection is based on a US Supreme Court decision finding that pensions like the ones we have (to which employees contribute pre-tax earnings) are in fact deferred compensation, and you can’t take away compensation somebody’s already earned because later you decide you don’t want to pay it to them. Seems like basic fairness, does it not? You can’t just go around breaking legal contracts in any arm of the law, and pension compensation is no different from any other contract.

    The problem in CA isn’t “pensions” (the AVERAGE CalPers pension is $23,000 per year, and that person may not even get social security, so that’s a poverty level retirement income for a lifetime’s work serving you and me), it’s the extreme cases that make people mad — like the $7 million a year UC football coaches make (yes, they’re public employees!!) who then rake in ridiculous pensions. Just cap pensions at some reasonable level ($100,000?), and quit picking on the little guys.

    And how about instead of pension envy, you go for pension equality. Raise all boats, don’t sink all to the lowest level.
    That’s what America’s about.

    (-3) 49 Total Votes - 23 up - 26 down
    • TheBeachBum says:

      The assertion that the average public employee pension is under $30,000 is never accompanied by the context that the figure covers all former state workers getting a pension, including those who worked barely enough years to qualify for retirement pay.

      According to the Legislative Analyst’s Office (a state department staffed by public employees), in 2010 the average pension benefit for all CalPERS retirees (including those w/ less than 25 years in the system) is around $25,000 a year. That’s not even close to the private sector average, but still not the real problem.

      It’s the public employees who retired in 2008-09 with 25 years or more of service who will receive between $53,000 and $66,000 a year (double the current average). This amount will grow exponentially over the years to come as the percentage of retirees whose benefits were spiked from 2% to 2.7-3% in the late 90’s increases.

      That’s the problem.

      It’s the tens of thousands of public safety workers (Police, Firemen, Prison Guards, along with… lifeguards, motor-vehicle examiners, emergency dispatchers, livestock inspectors, funeral home inspectors, fingerprint analysts, litigation specialists, weights-and-measures specialists, photo-electronics technicians) entering the retirement pool at 3% @ 50.

      That’s the problem.

      It’s the percentage of public workers receiving pension benefits topping $100,000 a year (19,100+ in 2011) that is projected to keep growing (78,000+ in just 4 years), in part because of increased benefits adopted in the past 15 years.

      That’s the problem.

      It will be impossible, even if the California economy was strong, to service such future pension obligations.

      That’s the problem.

      (26) 42 Total Votes - 34 up - 8 down
    • justme says:

      ….”a lifetime’s work serving you and me….. What? We’re not talking about defence of our women and children from the hoards here, they’re paid all to generously for their “work” as it is performed. No risk involved as it is for the those of us who have private businesses.
      Why is it that someone who takes less risk for less work than a business owner ends up laying around at 65 yrs. old while a business owner is still out producing and essentually working to compensate the guy who is “retired”.
      No excuse, “highjinks” (perfect), “government workers are generally less competent, adventurous and productive.
      Gotta go to work now, some retiree somewhere needs my hard earned money to fill his retirement account.

      (10) 28 Total Votes - 19 up - 9 down
    • viamagnolia1 says:

      Now who is out to lunch? We got information from a reliable source that unions are going to back, finance and train candidates to run for city council seats to try and protect pensions. Note to unions,
      CPRN2012 will be watching you.

      (15) 19 Total Votes - 17 up - 2 down
  7. Sally says:

    The problem is not one of choice, the pay rates, pension costs and healthcare costs are so out of line with the private sector that if cities, counties, and states were to be held to the same accounting practices as the private sector they would be in chapter 11.
    The question is begin to fix it now and the cuts will be bad but nothing like putting it off.
    If we do not begin now we will look a lot like Greece in a couple of years.
    THERE IS NO MONEY

    (24) 32 Total Votes - 28 up - 4 down
  8. Fernella says:

    Out of all the struggles, layoffs, furloughs, and cuts, I just can’t help but feel we are over due for major changes.

    It is obvious that unions once were needed. Unions now need to evolve with our times.

    I have experienced both public and private sector jobs. I have to say, I see pros and cons still on both sides.
    I am frustrated with some Teachers who barely slipped through the “tenure” gate and feel they do not have to conform to the needed changes in curriculum standards. We have a very large population of Teachers who work their butts off and embrace what is needed to be done. They are left exhausted and feel unappreciated.

    Classified staff are a similar mixture. Unions are telling them to not do anything more then what is in their job descriptions. With staffing cuts, reduction of hours, and job combining, most are also working their butts off doing the best they can in the hours they do have. Others who seem to scream the loudest do not want to be part of the solution and do only the bare minimum.

    I remember some years back when our union wanted to go into arbitration over a 10.00 a month per family insurance increase. I had just come from paying the extremely high price of paying for private insurance out of pocket. I was stunned that it was even an issue on the table. As it turns out, it was when the warning signs were starting to surface of our current economic peril.

    Yes, we are past due for reform. Let’s be practical and put our minds together and look at the needed changes logically and DO THE RIGHT THING!

    We have a choice as Americans. Thank god!

    (11) 15 Total Votes - 13 up - 2 down

Comments are closed.