Brown Refuses Minor Pension Reforms

JAN. 14, 2011

By STEVEN GREENHUT

Gov. Jerry Brown is coming into office with a lot of highly publicized and some praiseworthy activity, as he pushes ahead what he calls an honest budget, free from the usual gimmicks, and makes cuts in his office budget, cell phone use by state employees, redevelopment agencies and so forth. I praise him in my column this coming weekend for his redevelopment plans. But overall his budget appears to be more about public relations than real reform. Brown is setting us up for tax extensions, by claiming that he’s doing everything he can to fix things and there are no other choices left for California voters.

I saw evidence of this on Thursday, as some of the state’s most prominent tax fighters attended a summit in Sacramento yesterday sponsored by the Howard Jarvis Taxpayers Association. They made it clear that they will not be going along with Brown’s plan to extend taxes. They also blasted Brown for not being serious about pension reform. I gave a talk at lunch going over the depth of the state’s pension crisis along with Marcia Fritz, president of the California Foundation for Fiscal Responsibility — the group best known for publishing the database detailing members of the state’s $100,000 pension club.

At Brown’s recent press conference announcing his budget, he ignored pension reform, which is probably the biggest financial mess facing the state. Reporters asked about that and he admitted that pension reform is not included in his budget, but sent us to his Web site where we will find his views on reform. No wonder the public employee unions spent so generously to get Brown elected. Where is pension reform? Reform ideas should be in the budget, not on a Web site.

At the taxpayer summit, Fritz told the audience that she had advised both Brown and GOP candidate Meg Whitman on pension-reform issues and she gave Brown a list of several minor things he could do to save money on pensions — the low-hanging fruit that wouldn’t elicit much blowback from the unions. Yet he chose not to include any of these things in his budget. She’s an auditor and when she audits companies she said that she looks for little things to know whether the company is serious about getting its books in order. Looking at these little things — or rather the way Brown and Co. refused to take even the tiniest step toward pension reform — she is convinced that Brown is not serious about pension reform.

For instance, she suggested that the administration change the way Cal Fire wants to include planned overtime as part of its pensionable benefit package. The California Public Employees’ Retirement System is about to retroactively increase these pension benefits — and Brown could easily stop this. The prison guards, whose members can retire at age 50 with guaranteed six-figure pensions, also receive an additional 401/k program, which could easily be stopped. But Brown refused.

Fritz also pointed to a loophole that allows public school teachers who work part time through job sharing to earn full retirement credit for their time. She also suggested changes to the state’s absurd airtime purchases, whereby public employees can pay for enhanced retirement benefits at about 50 cents on the dollar. “Not a single one made it into his budget,” she said. “He didn’t try very hard.”

Fritz also noted that Brown’s education funding plan doesn’t even mention that the California State Teachers Retirement System, in changing its actuarial rate assumption from 8 percent to 7.7 percent, has doubled its pension liability. The state is vastly underfunding teacher pensions, and contributions need to go up — but Brown completely avoided the issue, by pretending in his budget that the system is funded adequately. That’s a $4 billion issue.

This makes a joke of Brown’s claim that he’s doing everything he can. This certainly is not an honest approach to budgeting. Brown is promoting a phony choice — cutting or raising taxes. But what about all these significant reforms that could save billions of dollars?

Fortunately, the state’s top taxpayer advocates aren’t going to let this matter slide. If you look at the little things you see that Brown is doing the business of the unions that elected him.