Brown's Pension Reform A Yawner

April 1, 2011 - By admin

APRIL 1, 2011

By STEVEN GREENHUT

It’s hard to know whether to be relieved that Gov. Jerry Brown has finally recognized the state’s massive pension problem or to be appalled at how long it took for him to address and at the way his “Jerry Come Lately” plan manages to avoid the most serious issues.

Stanford University estimates California’s pension liability at an astounding half trillion dollars, yet the governor has resisted Republican efforts to put serious pension reform on the ballot in addition to the tax-extension measures Brown believes are the key to a budget solution. Now, after the governor backed out of talks with the GOP, he released his pension plan. This is about little more than public relations — a chance for the governor to shame the GOP while championing the reform mantle.

But Brown isn’t really interested in pension reform. Union officials seemed surprised that he released the plan. They complain that any such reforms should be done at the negotiating table, which has been the standard Democratic talking point. That’s a joke. Unions typically own both sides of the negotiating table. They elect their own bosses. Anything done at that table will only harm taxpayers. But if Brown were serious about pension reform, his plan would not have been a shock to unions. He would have already given them an ultimatum or at least given them the heads-up about what was coming down the pike. Nope, this was a quick press release offered for bargaining purposes as a way to one-up the GOP.

It’s not that the proposals are bad. I support all of these things. It’s just that these are the obvious simple reforms that should not even be up for debate. For instance, the first measure would eliminate something known as “airtime.” As the Brown statement explained, “Would eliminate the opportunity, for all current and future employee members of all state and local retirement systems, to purchase additional retirement service credit.” Airtime is an abuse of the taxpayers. Typically, public employees are able to buy additional retirement credit for a small percentage of the actuarial cost. It’s unnecessary especially given how generous these basic retirements already are.

The second item prohibits “pension holidays.” Here is the statement again: “All California public agencies would be prohibited from suspending employer and/or employee contributions necessary to fund the normal cost of pension benefits.” Instead of paying into the system when times are good, agencies often will save the cash. They love to hide the size of the pension debt. Private sector companies can’t get away with these kinds of unsound financial practices.

The third item: “Prohibit Employers from Making Employee Pension Contributions.” Union members always blather about how much their members contribute to their own pensions. What they never say is how often the taxpayer — i.e., the agency — pays the employee’s contribution in addition to the employer’s contribution. Notice that such stunts rarely could happen in the private sector. But this is only taxpayer money after all.

The fourth item would ban retroactive pension increases. Here’s another outrage. Virtually all of the pension increases in recent years have been granted retroactively — going back to the day the employee started working. This is done as a buy-off to union officials. Girard Miller of Governing magazine argues that retroactivity is never justified. I’ve heard union officials defend these increases as measures to help recruitment, but it does nothing to enhance recruitment (not that recruitment is ever really a problem in the overpaid public sector) by giving current employees gifts of public funds. In fact, the Orange County Board of Supervisors is pursuing a lawsuit against the retroactive portion of a 2001 pension increase for deputy sheriffs by making that unconstitutional gift of public funds argument along with the argument that the increase runs up debt without a vote. A vote for debt is required by the state constitution.

The fifth item bans a noxious pension-spiking scheme that allows California public employees to base their permanent retirement pay on the last year’s work rather than on an average of the last few years, which is how more normal states do it. In California, workers will find ways to artificially inflate their last year’s pay (bogus promotions, moving to temporarily take a higher-paying job) so that they will have an inflated pension, all courtesy of the state. The sixth item limits some other pension-spiking gimmicks by requiring that only base pay is used to calculate pensions.

The seventh item “Prohibits payment of pension benefits to those who commits a felony related to their employment.” A proposal that would have done that was crushed by Democrats earlier this year. Unions argued that it’s unfair to the families of these felons. But we’re talking about corrupt cops and others who committed a fraud — who used their government position to commit serious crimes, yet who can then still receive these pensions. Remember that unions defend even the worst among them.

So these are good, simple measures that would — if the plan goes forward — halt some of the most corrupt pension practices. But these items will not fix the bulk of the problem, although they will save some money. They do not address oversized pensions or promote anything that will save the kind of money needed to get the system under control. Almost as an afterthought, the governor’s statement includes the following:

PROPOSALS UNDER DEVELOPMENT

Impose Pension Benefit Cap.

Improve Retirement Board Governance

Limit Post-Retirement Public Employment

Hybrid Option

Address CalSTRS Unfunded Liability

Note that these measures, which at least sound like they are getting closer to the heart of the problem, don’t even get a full sentence of explanation. This confirms my thesis that Brown is engaging in a public relations stunt. He basically had his staff throw together a press release offering half-baked solutions. It’s not as if this is a new issue, given that he offered more detailed proposals during his campaign. If he were serious about reform, the unions would know what was coming and would be furious. The proposals would be in depth. Republicans would be taking them more seriously.

But Brown, master politician that he is, is playing games.

I welcome any pension reforms. I support the ones he detailed. But I wouldn’t assume that Brown is anywhere nearly as serious about these proposals as he is about pitching tax extensions.

Comments(14)
  1. stevefromsacto says:

    Wow, what a surprise!

    You will only be satisfied if Gov. Brown proposes to eliminate all public employee pensions and to make all public employees work for minimum wage with no benefits. And then you’ll complain because he didn’t do it sooner.

  2. Moe says:

    Put it on the ballot?, really?
    Can’t any of our politicians just do thier frickin jobs?

  3. RT says:

    Release the lawsuits !!!. How much will California lose fighting the law suits that public employees will file. It will drag out for years and given
    California’s liberal courts, the public employees and thier unions will win.

    The answer is to create a new system for new hires in which they pay into thier own “IRA” type accounts. When they retire they get what they have put in.

  4. Roy Bleckert says:

    Steve

    Your right on Jerry if nothing else is a master politico

    If you study Jerry’s whole record , you might find he is on both side of every issue at one time or another

    Jerry was raised & educated from birth in the politico culture & knows how to play the politico game like a fine Stratovarius Fiddle !

  5. John Seiler says:

    StevefromSacto wrote: “You will only be satisfied if Gov. Brown proposes to eliminate all public employee pensions and to make all public employees work for minimum wage with no benefits. And then you’ll complain because he didn’t do it sooner.”

    No. We just want them to have reasonable pay and compensation that doesn’t bankrupt the state. And we want them to pay into 401(k)-type retirement funds for which the taxpayers are not on the hook in the future.

    And we want to get rid of the multiple wasteful and duplicative agencies and departments that empty down the state treasury while entangling citizens in infinite red tape.

    Under Democratic Gov. Mario Cuomo, New York has a reasonable budget with no tax increases, and a reasonable pension plan for government workers that doesn’t bankrupty NY. Why not here?

  6. Gerry Good says:

    These reforms proposed by the Gov only scratch the surface. And the Gov is only talking not doing! Wonder if he will actually ever do anything? UMMMH!

  7. Rex ther Wonder Dog! says:

    Unions typically own both sides of the negotiating table. They elect their own bosses. Anything done at that table will only harm taxpayers
    =====================
    This is the problem, there is no collective bargaing in the public sector. There ais no one to truly represent the taxpayers, and that is why pension reform must be mandated from the state, and if it needs a Prop 13 style initative then so be it.

  8. Rex ther Wonder Dog! says:

    Release the lawsuits !!!. How much will California lose fighting the law suits that public employees will file.

    It will drag out for years and given
    California’s liberal courts, the public employees and thier unions will win.

    ===============================

    I agree, cut the pensions today for ALL public employees and then duke it out in court-there is NOTHING to lose. We are already $500 billion in the hole, and that does not count healthcare, so bring on the litigation.

  9. Rex ther Wonder Dog! says:

    You will only be satisfied if Gov. Brown proposes to eliminate all public employee pensions and to make all public employees work for minimum wage with no benefits
    ===================
    Hey Steve, we know you’re talking points are just hot air-so how about we make a real solution, put ALL public employees in social security just liek everyone else.

    Or are you goign to claimvthat will drive our multi millionaire public employees to the poor house too????

  10. Tough Love says:

    Comment summary:

    stevefromsacto … he likes the status quo with great pay and extraordinary Pensions & benefits, and heaven forbid reductions should be made which just EQUALIZES Public and Private sector “total compensation”.

    Rt … thinks spending a few million to perhaps win reductions of 100-200 times that amount is foolish. No, businesses take such calculated risks all the time and given the totally unjustified level of current pensions and benefits (and the extra ordinary level of greed exhibited by their Union and members, it is a non-brainier that these and stronger reductions must be pursued.

  11. 1 tired citizen says:

    I am starting to believe a lot of Governor Brown’s proposals are nothing but front page lip service. A few months ago, he issued a voluntary recall of 48,000 of the 96,000 state paid-for cell phones claiming a savings of $20 million a year. I would like to know why we were paying for 96,000 phones, what are the requirements for a free phone, how many phones were actually turned in and how many we are still paying for, how much money was actually saved(don’t forget about the fees for early termination). Without knowing the results of these plans, we don’t even know if they were even implemented. Any Californian willing to vote for extending our higher taxes for 5 years without even knowing where Sacramento plans to use these funds is a fool. Our federal government likes giving bailouts,but I am not willing to give more of my money to bailout our Sacramento politicians. They caused the deficit,not me. It’s their job to fix our state, giving them more money to spend won’t fix anything.

  12. FiremanBill says:

    Jerry’s there to keep the gravy train rolling along for well into the future. You dumb sap taxpayers are gonna keep lobster and prime rib on my table. Maybe if you shine my shoes I’ll throw you a bone!

  13. Rex ther Wonder Dog! says:

    stevefromsacto where did u go???

  14. Richard Rider, Chairman San Diego Tax Fighters says:

    In San Diego, we dealt with this “wasted money litigating” pitch before. We had what we thought was an illegally passed countywide special sales tax — passed with a simple majority vote when we figured the constitution required a 2/3 vote. We were told not to waste our money and the government’s money contesting this (at the tome) commonly passed tax.

    Yes, the odds were against us, but we won in the CA Supreme Court. The tax was not only repealed, but we made the county give back $400 million that it had already improperly collected. Total county taxpayer savings — $3.5 BILLION. Plus other taxes up and down the state were either rescinded, or blocked.

    Cost to taxpayer? One million dollars (unwisely) paid to their lawyers, and a half million the county had to pay my lawyers. So taxpayers spent $1.5 million to save $3.5 BILLION. Would that I invested my OWN money that well!

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