Will Even Modest Pension Reforms in California Stand?

4577brpension2 Will Even Modest Pension Reforms in California Stand?

Gov. Jerry Brown has not exactly been a
hero when it comes to dealing with the public pension crisis in
California. His
latest budget flat-out declines to address the hundreds of
billions of dollars in debt the state faces from unfunded public
employee pension liabilities. He acknowledged its existence in his
budget summary, but does not appear to be taking any measures to
reduce it.But he hasn’t been a complete failure, entirely. Last fall,
Brown did manage to push through some
modest pension reforms – mostly targeting new employees – that
capped salaries for pension calculations, required new workers to
contribute to their own pension fund, increased the retirement age,
and most importantly, attempted to address “pension spiking,” where
various little wage enhancements or bonuses were used to
artificially increase a public employee’s salary in order to
increase their pension earnings upon retirement. Pension spiking
has helped contribute to the more than 20,000 retired public
employees (figures courtesy of Pension Tsunami) who currently
rake in six-figure annual incomes.But already what little reform the state has managed is in
jeopardy. Daniel Borenstein at the Contra Costa Times
noticed that the California Public Employees’ Retirement System is
essentially going to defy the order that pensions will be
calculated based on base pay by declaring enhancements and bonuses
are part of
base pay:
If new workers receive one of nearly 100 different pay premiums
for everything from marksmanship and longevity to being a notary or
working on a library reference desk, CalPERS has decided, the extra
compensation will be counted as income when their pensions are
Never underestimate the power of bureaucracy to twist words to
prevent institutional change. With a stroke of a pen, bonuses can
just be declared to be part of “base pay.” And these bonus systems
are just rife with abuse. Municipalities give bonuses to employees
for knowledge of additional language even if there’s no demand for
it in their communities. I’ve seen contracts where street workers
get bonuses if a particular type of street paving process is used.
City workers find a way to make their base job responsibilities
worthy of extra wages.But that’s not all! The Teamsters and two other unions are
sponsoring a bill that would
exempt 20,000 mass-transit workers from the pension reforms,
arguing that the changes violate collective bargaining rights and
put federal mass-transit grants at risk. Via the
Sacramento Bee:
Introduced by Watsonville Democrat Luis Alejo, Assembly Bill 160
assumes public pension changes that took effect Jan. 1 violate a
condition of mass-transit federal grants requiring an agency to
preserve whatever employees’ collective bargaining rights are
authorized in that state.
The U.S. Department of Labor certifies when a mass transit
provider is following the rules – no certification, no money. Alejo
declined to comment on his bill, but his office estimates the state
receives about $2 billion annually from federal mass transit
That union activism could jeopardize California rail subsidies
strikes me as a bonus, honestly. Alison Neufield, a San Francisco
labor attorney, did point out that the unions probably don’t want
to push this battle too hard, because obviously blocking the
federal grants will kill their own members’ jobs.Other union employees are also fighting implementation of the
pension reforms. Unfortunately, Borenstein has noted in a follow-up
column, Brown and California Attorney General Kamala Harris aren’t
lifting a finger to actually
defend it in court:
Employees sued the retirement systems that administer pensions
in the three counties. But the systems say they are indifferent and
will abide by whatever the courts decide.
The retirement systems don’t ultimately pay the bill. The cost
is passed on to taxpayer-supported local governments. Yet the three
counties’ boards of supervisors have sat on the sidelines, as has
Attorney General Kamala Harris, whose job includes defending state
laws, and Gov. Brown, who vowed to end this sort of abuse.
In Contra Costa Superior Court on Thursday, Judge David Flinn,
calling the case there “a very significant economic matter,” said
he found it “troubling” that only one side was represented. “Where
are the real parties in interest?”
Flinn and Alameda County Judge Evelio Grillo have struggled with
whether they can rule on theconstitutionality of the law if no one
defends it. Grillo seems ready to move forward anyway and Flynn may
Brown’s failure to defend the very bill he negotiated throws
even these extremely modest gains into jeopardy. It may be
ultimately up to the voters to force it, like they have in San
Diego and San Jose (and the unions are
trying to block it there, too).

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Will Even Modest Pension Reforms in California Stand?

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