More Abuses, Little Reform

Steven Greenhut: This is my column from today’s San Francisco Examiner.[1]
Nearly every day, the public learns of new tales of pension-abusing public employees. Yet reform efforts are still miles away despite new state and federal proposals that attempt to rein in the problem.

For instance, the Los Angeles Times reported recently that “More than 100 lawyers and auditors working for California’s prison oversight office are classified as peace officers, carrying guns, driving state cars home at night and becoming eligible for the generous pensions offered to people who risk their lives in the name of public safety.” That article reveals one of the dirty secrets of “public safety” pensions: that the category of public safety workers keeps growing, often to include groups such as auditors and milk inspectors who no one seriously believes are involved in dangerous work.

No wonder the state’s pension debt has soared to $500 billion, according to Stanford University reports. But when pension reform efforts come before the Legislature, the state’s Democrats routinely reject them and argue that any reforms can come at the negotiating table where unions have the most leverage and can undermine serious reform.

That’s why reform efforts will have to come, to some degree, from the top down. The good news is that a California pension reform organization has released a draft initiative plan for the 2012 ballot that would require public employees to pay half their retirement benefit costs, mandate defined contribution plans for new employees, significantly limit public pension benefits and require public employers to fully fund all pension and retiree medical benefit plans by 2020. The initiative will impose stringent new rules on the governance structure of public pension plans.

These are sensible and needed reforms, although the last time the organization floated such a proposal it couldn’t raise the funds to put it on the ballot. Sponsored by Californian Pension Reform, the initiative would apply to all public agencies in the state of California. “The last time we tried to reform pensions, the unions convinced everyone that the benefit changes we sought could best be negotiated at the bargaining table,” explained CPR President Marcia Fritz. “We’ve seen a little movement in this direction, but mostly it’s been done to avoid public scrutiny. The unions have offered few changes that would begin to fix a half-trillion-dollar unfunded pension liability problem. In fact, they’ve actively tried to stop even modest pension reform efforts at the local level. So it’s time to take this matter to the state’s voters.”

At the federal level, U.S. Rep. Devin Nunes, R-Visalia, is introducing legislation that would force public pension officials to be more truthful in their disclosure of pension debt. “To date, state public pension officials have disclosed unfunded liabilities that are in excess of $1 trillion,” according to a statement from his office.

“However, this enormous number fails to convey the true nature of the debt confronting taxpayers because public pensions are able to calculate their liabilities using unreasonably high discount rates.” His Public Employee Pension Transparency Act would require government plans to post their true liabilities with the Department of Treasury. The information would be posted on a searchable website. Agencies that fail to disclose the information could lose their federal tax-exempt bonding authority.

We’re still a long way from reform, but the more the public learns of abuses the more supportive it may become of real reform.

DEC. 5