Governor Supporting Pension Reform

APRIL 22, 2010

By KATY GRIMES

Yesterday Governor Arnold Schwarzenegger and Senate Minority Leader Dennis Hollingsworth, R-Murietta, announced that they’re supporting pension reform for state employees. The governor stated that while it is a compromise from his earlier hard line approach, something must be done immediately in order to avoid worsening economic disaster in California, and this effort seeks to bring the public employee benefit packages more in line with the private sector.

The bill, authored by

Hollingsworth, would only adjust the pensions of newly hired state employees, leaving benefits untouched for existing state employees.

The governor said that he did not believe it was right to take away the already committed pensions to existing state employees. But, he added, “We have to stop promising things the state can’t afford.”

When questioned about his change in tone and compromise, Schwarzenegger said that he had had many meetings with experts and determined that the state needs to compromise. He added that they are currently in talks with organized labor.

The governor was asked why he thinks this can be achieved now and in opposition to the powerful public employee unions, when he could not achieve this several years ago. Schwarzenegger stated that his answer is always the same: “Never give up.”

CalWatchdog Editor Steven Greenhut analyzed the bill, SB 919, yesterday: “SB 919 includes the following major reforms:

–  Reduces the retirement formula for non-public safety employees by requiring them to work 10 years longer before being eligible for full retirement benefits at age 65.

–  Requires public safety employees, including CHP, firefighters, correctional officers, and other peace officers to work 7 years longer in order to qualify for full retirement benefits at age 57.

–  Changes the final compensation calculation to take into account the highest 3 years of wages instead of the highest 1 year.

–  Ends state safety retirement benefits for milk inspectors, billboard inspectors, etc. and returns them to Pre-SB 183 Miscellaneous/Industrial classification.

–  Increases the amounts that employees must contribute toward their retirement by eliminating the exemption threshold. Currently, the first $200 to $800 of an employee’s wages is exempted from the employee’s calculation for retirement contribution. This bill eliminates that exemption amount increasing contributions to CalPERS, resulting in an estimated $2 billion in cost savings through 2040.”

Hollingsworth said he will provide more background and details of the bill in the next few days.