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.

39 comments

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  1. ggswede
    ggswede 14 January, 2011, 10:32

    Meg was right !

    Reply this comment
  2. David from Oceanside
    David from Oceanside 14 January, 2011, 18:19

    Nothing can stop California’s fall into the abyss.

    There will be no reform in CA so long as it can be avoided. Liberals who once boasted to never trust anyone over 30 and burned their draft cards have become the establishment and they are worse than anything they once opposed.

    I am disgusted to know that as a Babby boomer that I am part of the worst generation on record.

    Oh and Meg was not right. She was nothing but another big government Republican competing with big government Democrats to see who could utterly destroy prosperity and liberty first.

    Reply this comment
  3. Tough Love
    Tough Love 15 January, 2011, 20:44

    Choice (A) “hard freeze” on ALL pensions, (B) Outsource 90% of all employees, or (c) insolvency

    Reply this comment
  4. Pat
    Pat 15 January, 2011, 22:19

    Perhaps is waiting for the first line of budget activity to gain some traction and then he’ll enliven us with another level of reform.

    Just wishing and hoping.
    At this point, hoping that the RDA demise works.

    The designated redevelopment “blighted” areas in my city include some vacant but well-kept privately owned properties as well as the neglected and clap trap neighborhoods. Then there are the open spaces, not blighted, that were picked for the big box retailers, etc.
    So far, the city’s RDA millions have gone Big Box and the other areas are beginning and continuing decline while the city plans new million dollar fire and police developments next to city hall. (Our city contracts out for police/fire services.)
    Of course, council members names are all over their pet “projects” with plaques, ceremonies, etc.

    Private property owners and developers pay through the nose just to get the applications and permits to develop property with no guarantees or guidance toward approvals.
    Private money out — no projects allowed.

    Reply this comment
  5. Pat
    Pat 15 January, 2011, 22:22

    quick note – that was, Multimillion dollar police and fire departments……for contracted services.

    Reply this comment
  6. Charles
    Charles 16 January, 2011, 04:02

    If you want the 13% of my retirement money granted to me retroactively by AB 400 ten years ago and can legally get it knock yourself out. Other than that I get exactly what California agreed to the day I walked in the door in 1969.

    In the meantime go after bullet trains, stem cell research, green power, carbon caps, benefits for illegal immigrants and all the other untouchable luxury goods Californians think they want. Ten times and more over what retirements cost. And don’t forget, California taxpayers only pay 15% to 20% of pensions. The rest is paid for by previous donations and money earned by investments, something Californians agree to many decades ago.

    Reply this comment
  7. Charles
    Charles 16 January, 2011, 04:06

    To Steven Greenhut

    Do you REALLY think retirements are the biggest problem in the State budget? You must be kidding someone, but not the knowing public. Perhaps you lack basic math skills.

    Reply this comment
  8. Bob
    Bob 16 January, 2011, 07:46

    Charles, are you brain dead? Get a clue, man! The gummit pensions in this state are underfunded by hundreds of billions of dollars. The public employee unions are bankrupting the state.

    Reply this comment
  9. pacificapatriot
    pacificapatriot 16 January, 2011, 08:54

    Governor Brown’s leaving the prison system intact without any cuts was the clue as to how fair the budget cutting will be. The prison guard’s union is not to be messed with and we HAVE to keep all those potsmokers in jail!!

    Reply this comment
  10. Rex ther Wonder Dog!
    Rex ther Wonder Dog! 16 January, 2011, 12:01

    6. Charles says:
    January 16, 2011 at 4:02 am

    If you want the 13% of my retirement money granted to me retroactively by AB 400 ten years ago and can legally get it knock yourself out
    ==========
    It was SB400, not AB400, and it was a 50% retro pension increase not 13%, but don’t let the facts get in the way of GED cop whopper lies 🙂

    Reply this comment
  11. Rex ther Wonder Dog!
    Rex ther Wonder Dog! 16 January, 2011, 12:03

    7. Charles says:
    January 16, 2011 at 4:06 am
    To Steven Greenhut

    Do you REALLY think retirements are the biggest problem in the State budget? You must be kidding someone, but not the knowing public. Perhaps you lack basic math skills.

    =================
    Sir Charles the GED Wonder-with more crazy talk. Charles-everyone in the nation knows the truth about public employemnt, and yes they know it is BK’ing everyone and everything in sight. The ONLY ones who claim otherwise are GED educated gov bozo’s like you, who would be making minimum wage with that big bad GED in the real world.

    And CalTurds is only 46% funded-that is BK in the real world. CALstrs is even worse.

    Reply this comment
  12. Rex ther Wonder Dog!
    Rex ther Wonder Dog! 16 January, 2011, 12:04

    Charles, are you brain dead?
    =============
    Ill take this one.

    YES! Charles is brain dead.

    Reply this comment
  13. SeeSaw
    SeeSaw 16 January, 2011, 13:48

    Steven Greenhut, Marcia Fritz, et al were not elected to do anything for this State–Jerry Brown was. Maybe they should run and get elected, and then they could tell everyone subordinate to them how things are going to be.

    The state only pays 2.5% of its total budget to CalPERS–(information provided by CalPERS at CA Dialogue in Feb. 2010.) Therefore, it is impossible that pensions are CA’s biggest problem. Pension reform started with GAS when all new hires in several categories were designated start out their respective careers with formulas that go back to pre-1999. Then, JB has asked those that haven’t settled to take pay cuts. How then, can he be accused of not being serious about pension reform? The elephant in the room, that most of the pundits like SG and FR refuse to look at, is the fact that the majority of the exhorbitant pensions are collected by retirees who were high level managers–never union members.

    SG, what and how many former rank and file prison guards can you name who retired at the age of 50 with six figure pensions? I will wait, with baited breath, for your documentation on that subject.

    Reply this comment
  14. Rex ther Wonder Dog!
    Rex ther Wonder Dog! 16 January, 2011, 16:09

    The state only pays 2.5% of its total budget to CalPERS–
    ===========
    And CalTurds is underfunded $500 billion because of they only contribute 2.5%-if they paid the required amount to fully find CalTurds, based on a sustainable ROI of 5%, they would be paying 50% of the budget to the pensions, and that number would grow exponentially as the higher pensions of SB400 started to replace all the low ball pensions from 20-40 years ago.

    Reply this comment
  15. Rex ther Wonder Dog!
    Rex ther Wonder Dog! 16 January, 2011, 16:12

    SG, what and how many former rank and file prison guards can you name who retired at the age of 50 with six figure pensions? I will wait, with baited breath, for your documentation on that subject.

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

    Seesaw-Any prison gaurd who has vested-worked 5 years- can retire at age 50 in the prison system.

    How much of a pension they receive depends on how many years they worked and how much they made in their highest year.

    If they worked 20 years and made $200K their final year they would get a $120K per year pension.

    Reply this comment
  16. Tough Love
    Tough Love 16 January, 2011, 16:59

    Dear Charles, When are you going to stop singing the tale that pensions are 80% paid-for by “investment earnings”. You KNOW its BULL.

    The 80% paid from “investments” is an often-repeated financial distortion (no doubt pushed by the Unions). Investment Income is not an original source of funds, only contributions from the employee and the employer (meaning taxpayers) are (without which there would be no investment income), with the taxpayers generally paying 80+% of total contributions. In the absence of those contributions, 80% of the total investment income (that share associated with the 80% of total contributions coming from taxpayers) would have stayed in the taxpayers’ pockets. It’s simply an issue of pre-fund vs pay-as-you-go, but the taxpayers are still paying 80+% of the entire cost of the Pensions.

    Reply this comment
  17. Wags
    Wags 16 January, 2011, 17:03

    Bob is right, The real problem is what the Gov , Unions, and pensions funds managers are not reporting. They are underfunded to hundreds of billions. In 2012 the General Accounting Standards Practices(GASP) will change the accounting practices to a real Rate of Interest Return. When Calpers and the Unions got Gray Davis to up the pensions they exaggerated about the ROI. It made it look like these pensions were funded. They are not. They will claim they are funded, but it’s a white lie, until 2012 when the hammer will hit hard and the State, Counties, and Cities will have to make massive payments to the fund. It will crush the budget.

    Reply this comment
  18. Tough Love
    Tough Love 16 January, 2011, 17:12

    Quoting Seesaw …”The elephant in the room, that most of the pundits like SG and FR refuse to look at, is the fact that the majority of the exorbitant pensions are collected by retirees who were high level managers–never union members. ”

    Baloney, and you know it. The RICH pensions formulas, the low retirement ages for unreduced pensions, the low # of years for full retirement, the inclusion of COLAs, the spiking of pensionable pay, etc. ……… all combine for ALL employees at EVERY (yes EVERY) pay level (from the lowest to the highest) to produe pensions the taxpayer paid-for share of which is 2,4, even 6 times greater than the pension value of a similarly compensated Private secotr taxpayer.

    It’s NOT a revenue problem, it’s NOT a funding problem its a GROSSLY EXCESSIVE BENEFIT PROBLEM.

    NO further funding is justified. Let the pensions be reduced proportionately to what CURRENT assets can buy and no more.

    The taxpayers have been hoodwinked long enough.

    Reply this comment
  19. SeeSaw
    SeeSaw 16 January, 2011, 20:14

    TL: The full retirement age for my 3% formula was 60–I was 72 when I retired, and I worked for 40 years. CalPERS does not allow pension spiking–my pension is based on my base salary only. I don’t think that a maximum COLA of 2% that is tied to the CPI is exhorbitant. This past year, I received 1.4%.

    You need to stop trying to compare apples and oranges, as far as the private and public sectors are concerned. Your viscious accusations toward those in the public sector does not look pretty, and will yield you no special recognition.

    Reply this comment
  20. SeeSaw
    SeeSaw 16 January, 2011, 22:36

    TL: To quote a former New York senator, in so many words: “You are entitled to your own opinions, but you are not entitled to your own facts”.

    These are my own facts: I received a retroactive, pension upgrade in 2002. It resulted in my receving 20% more in pension benefits than I would have received, without the retroactive portion of the new benefit. That is 20% more money that I have to put into the economy, to add to the GDP of the State of CA.

    Like Chas. has said about his pension amount, I will say about my own: If you can take my extra 20% away, legally, be my guest. I predict the process will result in a lot more headaches for you, than it will for me, watching you try.

    Reply this comment
  21. Tough Love
    Tough Love 17 January, 2011, 07:01

    SeeSaw, My comments on the 2, 4, even 6 times greater Public vs Private sector pensions are accurate. Obviously the relationship for a particular retiree depends on the specifics of that retiree, In you case you definitely benefited (you rec’d 3%/yr while 1.5% is generally the MAXIMUM found in Private Sector Plans, and ZERO COLAs in Private Sector Plans), but likely by less than most due to much older than normal retirement age.

    It’s not a question of whether something (your 2% COLA) is “exorbitant”, it’s that each of these elements of Public Sector Plans contribute to a retirement package multiple times greater in value than their Private Sector counterparts … again with your counterparts (in the Private sector) paying for 80+% of YOUR pension benefits.

    The lack of retirement security in the Private Sector is contributed to by the need to pay excessive taxes that fund YOUR very rich Plans.

    Reply this comment
  22. Tough Love
    Tough Love 17 January, 2011, 07:09

    Quoting SeeSaw, …”These are my own facts: I received a retroactive, pension upgrade in 2002. It resulted in my receiving 20% more in pension benefits than I would have received, without the retroactive portion of the new benefit. That is 20% more money that I have to put into the economy, to add to the GDP of the State of CA.”

    Of all the attempts at justification of the richer Public Sector Pensions, I think this (that you’ve put the extra 20% into the economy) may be the poorest of all.

    Would the “economy” be any LESS better off if instead if granting YOU a 20% RETROACTIVE increase (that you neither contributed to the cost of, nor provided any specific services for) the money associated with that increase (100% funded by taxpayers) stayed with the taxpayers and was pumped into the economy by THEM, instead of YOU ?

    Reply this comment
  23. Charles
    Charles 17 January, 2011, 07:26

    Tough Love

    I receive 90% of my final pay. After 40 years. That is in fact 13% more than I signed on for. AB 400 gave that to me. If you can take that retroactive 13% away from me I will simply accept it. I do not say I would be happy, but take it if you can. The other 87% is what YOU the taxpayer agreed to in 1969.

    What part of a Contract do you not understand? What part of the United States Constitution do you not understand? What part of the Section of the Constitution regarding contracts do you not understand? I am well aware of the fact that the “average” taxpayer has been skrewed under Social Security. So government is not always fair or reasonable. Your legislature on the Federal level have been taking your money out of SS and spending it on wars or whatever they want and putting IOUs in the kitty. Of course there isn’t enough money in there to give you the kind of retirement I have.

    Don’t blame me. Why should I settle for only SS? Oh and by the way I paid for SS also. Maybe in two years I will be able to collect it.

    Enjoy the current interglacial Tough Love. It is interesting to talk to you.

    Reply this comment
  24. Charles
    Charles 17 January, 2011, 07:47

    Nonsense. The money put into Calpers earns interest for the persons retiring. You might as well say their salaries paid for their houses and children and you now own them. What are you thinking? Every dime paid to a person out of taxes still belongs to you?

    Nonsense. That money belongs to me. I earned it. And if you work at the Circle K they don’t own your house or your car or your children either.

    Reply this comment
  25. Rex ther Wonder Dog!
    Rex ther Wonder Dog! 17 January, 2011, 16:53

    25. Charles says:
    January 17, 2011 at 7:47 am

    Nonsense. The money put into Calpers earns interest for the persons retiring
    ==============================
    Calturds investments have NEVER paid for 75% of their expenses outside of 5 or 6 dot come years. The INTEREST CalTurds earned is from money taxpayers put into the system, not you.

    If you took out your small 5% contribution and added in 8% annual interest you might have $150K, not the multi millions that will be paid out. Your claim that YOU paid for more than 5% or so of your pension is pure baloney-like everythinbg you post.

    The last 10 years Calturds has not even paid 25% of their expenses from investments, they have had a 2.41% ROI. They had a NEGATIVE 36% ROI in 2008 alone (28% loss plus the failure to return their projected 8% ROI). I guesss according to Charles math in 2008 CalTurds paid 100% of their expenses with invetsment returns.

    BTW Charles, you don’t have a “contract” if the contract is invalid. Retroactive pension increases are not valid, so you have no “contract”. Now, what part of that does your GED brain not understand?

    Reply this comment
  26. Tough Love
    Tough Love 17 January, 2011, 17:12

    Rex, I’m not sure if Charles is just PLAYING dumb or is ….?

    Or perhaps engineers just don’t understand basic finance.

    Reply this comment
  27. SeeSaw
    SeeSaw 17 January, 2011, 18:39

    RWD: The retroactive pension increases were put into law by the State Legislature; therefore you have no reason to say they are not valid. If Moorelach should win, which I doubt, I will bet you that the pensions that have already gone into effect will stand.

    You have never answered my question as to whether or not you ever read the AG’s Amicas Brief, explaining why the retroactive pensions are valid. If you have not read it, you have no right to speak the way you do. Have you read it?

    Reply this comment
  28. Rex ther Wonder Dog!
    Rex ther Wonder Dog! 17 January, 2011, 21:19

    RWD: The retroactive pension increases were put into law by the State Legislature; therefore you have no reason to say they are not valid.
    ================
    Seesaw, just b/c a state legislature makes a law does not mean it is legal. The Congress makes laws everyday that are overturned by the courts as unconstitutional. Prop 187 passed ubder gov Wilson was declared unconstitutional. Healthcare by Obama has been declared unconstitutional by two federal courts. The AZ state immigration law has been declared unconstitutional by a federal court. There are many many laws that are passed that fail constitutional standards and are deemed unconstitutional and void.

    Do NOT be surprised if the CA Supreme Court finds for Moorlach. In fact in light of the damage that these retroactive pension increases have caused I will be SHOCKED if the CA Supreme Court (or the court of appeals) does not find for Moorlach and strike the law down.

    Reply this comment
  29. Rex ther Wonder Dog!
    Rex ther Wonder Dog! 17 January, 2011, 21:22

    You have never answered my question as to whether or not you ever read the AG’s Amicas Brief, explaining why the retroactive pensions are valid.
    ===================
    Jerry Brown is a public employee union puppet, you cannot seriously think his amicus brief is legit.

    Reply this comment
  30. Rex ther Wonder Dog!
    Rex ther Wonder Dog! 17 January, 2011, 22:56

    Charles says:

    California taxpayers only pay 15% to 20% of pensions.
    =============
    Actually the employees only pay 5%-at most, many employees pay zero.

    The other 95%-100% is from taxpayers.

    Reply this comment
  31. SeeSaw
    SeeSaw 18 January, 2011, 00:15

    RWD: So, you have closed your mind off to information. You have just decided to believe the contracts are illegal, without studying any supporting information. There is also an Amicus Brief from the Moorlach side. I have read that Brief too. What if your side loses when the case goes to trial in a couple days? Are you then going to continue charging that the pension contracts are illegal?

    Reply this comment
  32. Rex ther Wonder Dog!
    Rex ther Wonder Dog! 18 January, 2011, 08:11

    Seesaw, I think the case has “gone to trial”. A judge ruled at the trial court level that Moorlach was wrong. One judge, out of thousands in this state.

    The case is now at the court of appeals. I do not know the status of it, or when a ruling will be issued. But once again the court of appeals is just a panel of 3 judges out of thousands in the state.

    The ONLY ruling that counts is the LAST ruling, from the CA Supreme Court. Nothing else matters, and it makes no difference how the lower courts rule-this case will be decided by the CA Supreme Court and their ruling is the only one that counts.

    Reply this comment
  33. SeeSaw
    SeeSaw 18 January, 2011, 11:55

    The case is on the docket for Wednesday morning at 9:00 a.m. Moorlach has lost two previous court rulings. If Moorlach should lose, he should quit his charade right now. I respect the opinions of Jerry Brown. He is a puppet of no-one.

    Reply this comment
  34. Rex ther Wonder Dog!
    Rex ther Wonder Dog! 18 January, 2011, 12:06

    seesaw-do you have a link to the appeal court’s docket or website??? What is it on the docket for?

    The appeals court usually issues a written ruling, most of the time without any oral argument.

    Reply this comment
  35. SeeSaw
    SeeSaw 18 January, 2011, 12:41

    RWD: I read somewhere that oral arguments would be heard in the Second Distric Court of Appeal, on Jan. 19. I typed in, “Second District Court of Appeal”, and clicked on, “Calendar”. Then I typed in the case number, which is BC389758. It is scheduled to be heard at 9:00 a.m., Wednesday. I do not know where that Court is located.

    Since you are so smart, perhaps you could answer a question I have about the appeal process. I always thought that only the defendant could appeal a court verdict. The Deputies are the defendants. If Moorlach, being the plaintiff, should lose, how could he appeal further to the CA Supreme Court?

    Reply this comment
  36. Rex ther Wonder Dog!
    Rex ther Wonder Dog! 18 January, 2011, 15:01

    Either side can appeal a civil case.

    In a jury trial if the defanant is found not guilt that cannot be appealed, but other than that anyone can appeal.

    Thanks for the case #:
    http://appellatecases.courtinfo.ca.gov/search/case/mainCaseScreen.cfm?dist=2&doc_id=1918905&doc_no=B218660

    The link has ALL the background info.

    Locations and Telephone Numbers
    Divisions 1 – 5, 7 & 8

    Ronald Reagan State Building
    300 So. Spring St. 2nd Floor
    Los Angeles, CA 90013
    Tel: (213) 830-7000

    Reply this comment
  37. Rex ther Wonder Dog!
    Rex ther Wonder Dog! 18 January, 2011, 15:03

    Seesaw, we should go see the oral argument tomorrow morning in Smell A, you game?

    Reply this comment
  38. SeeSaw
    SeeSaw 18 January, 2011, 17:45

    RWD: I use Metrolink to go to LA and would have loved to if it were not my movie day, and I would have had to be on the train about 7:00 a.m. I just don’t get up that early anymore. Why don’t you tell us all about it, after you see it? (No trip to LA is complete without a stop at Phillipes–Alameda and Ord.)

    Why are you calling it Smell A? Because the homeless use certain places for their urinals? It makes me very sad for those that are in that situation. If you navigate to the right areas, you can avoid it.

    I went to a pension seminar at the Reagan Building once, and it was very pleasant and nice. It is on the list of buildings to be sold–I hope it does not happen.

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