Governor Unveils Aggressive Pension Reform Plan

SACRAMENTO (AP) — Gov. Jerry Brown unveiled details of his pension proposal Thursday that seeks to move new California state workers to a hybrid system where guaranteed benefits are combined with a 401(k)-style plan and would raise the retirement age from 55 to 67 for civil workers, as union leaders lined up to oppose his plans.

The Democratic governor’s plan calls for trimming generous public employee pension benefits that have saddled California and local governments with billions of dollars in unfunded liabilities. He is asking the Legislature to put a measure on a statewide ballot so the changes would impact both state and local government employees.

Brown’s plan deals mostly with new state hires by raising the retirement age from 55 to 67 for civil workers. Public safety officials who can now retire as young as 50 would have to work longer, but the calculation would be based on their ability to perform.

The governor also wants current and new hires to start paying a greater share of pension costs; some contribute nothing toward their benefits. By shifting to a mandatory “hybrid” system, employees with at least 30 years of service would replace about 75 percent of an employee’s salary through retirement funds and Social Security, according to the draft.

“I tried to do something that’s legal, that will save a hell of a lot of money going forward and that I think is fair,” Brown said at a news conference Thursday.

Brown said he went as far in scaling back benefits as he believes is legally possible, blaming lawmakers over the decades for gradually increasing benefits and approving “very generous and unaffordable ground rules that then the collective bargaining process took advantage of.”

Public employee unions already were lining up to oppose Brown’s proposal, which the administration estimates would save about $900 million annually.

Dave Low, chairman of Californians for Retirement Security, said the governor’s proposed changes would undermine retirement security for public employees who have already agreed to “hundreds of millions of dollars in pension concessions at the state and local level.”

“Workers across California have negotiated contributing more to their pensions and two-tier benefits,” Low said in a written statement. “We simply cannot stand for imposing additional retirement rollbacks on millions of workers without bargaining.”

Brown’s plan would require approval from the Legislature, where union-allied Democrats are likely to balk at some of the significant rollbacks, and where Brown failed to win consensus on pensions with Republicans last spring.

Sen. Mimi Walters, R-Lake Forest, a member of a newly formed Senate-Assembly committee on pensions, said Brown was “moving in the right direction” by recommending a mandatory hybrid system and raising the retirement age.

“Until we actually review the plan and can crunch the numbers, I will remain cautiously optimistic,” Walters said in a statement.

Several parts of the plan would require voter approval, including extending many of its provisions to employees at California’s public university systems, and Brown’s goal to add two independent, public members to the board of the California Public Employee Retirement System, the nation’s biggest public pension fund.

The board has come under scrutiny during an influence-peddling investigation by the attorney general’s office alleging fraud and kickbacks through middlemen known as placement agents who seek investment business.

The plan also would end so-called pension “spiking” that lets employees boost their payouts by including overtime and other benefits, and end the practice of buying additional service credits to inflate pension checks.

(Copyright 2011 by The Associated Press. All Rights Reserved.)

  • Kay

    Well,, great. It sounds like a good plan. Even with the changes it is a far better deal than anybody in the private sector has. However, I bet his union pals will never agree to it.

    • Michael

      Yeh the only difference is that private sector pay is about 40% higher than state employees. Why doesn’t the gov. try to make his rich buddies to share the pain too by paying a little more taxes rather than gov. workers who are always sacrificing lamb for sharing pain. After all rich people have gotten the most benefit from this country that made the environment more capitalist friendly than any other country (by gov.). The question is , could they be rich if they lived in some other country???

    • Jason

      The state has to do something to attract talented workers. As state employees we take a 25% (average) cut in pay with the understanding that our loyal service will be rewarded in the end. So go ahead and cut pensions and you will see the best and brightest workers the state has to offer hemorrhage into the private sector unless there is a raise in pay!

  • D

    Why do state employees need a union?

    I can understand private businesses who are trying to make a profit.

  • nobama

    How about following up with Welfare reform??? Mandatory cap on welfare benifits. Drug testing for Welfare recipeints. Require the welfare collectors to show up and do work for the state, clean out weeds, pick up trash.

    • ...

      your welfare comments will cost more in the long run. if they make people work for the money state work laws will come into play and then the payment will increase…. Not to mention the work they will do is going to put other people out of business thereby making those displaced workers to have to collect unemployment and or welfare as well.
      You need to think about what you are saying before you say it sometimes and stop echoing people that are in politics since they are there to lie to the people

      are you going to also pay for the drug testing ? not everyone on welfare is a drug user.

      You are clearly in a fallacious state of mind

      Reform mean improvement not make stuff worse

      • ...

        I’m not saying things don’t need to change. I am saying instead of offering dumb ideas that don’t help anything spend time actually trying to find a real fix to the issue. There is fraud at every level of every society. It’s not rocket science to figure out. If you not going to offer a usable solution just shut up since you are not helping with dumb solutions.
        For example. A tire is leaking. Don’t say oh we need to poke other holes in it to make it leak better. Patch the hole or replace the darn tire.

      • Welfare State

        Obviously you have not dealt with the welfare crowd and are clueless to the rampant fraud and abuse that proliferates in the California welfare system.

      • John

        People on welfare should not be able to eat better than people not on welfare-those who are proud enough to work for a living and have respect for themselves. Maybe it should be controlled by the weight of the welfare family…for every percentage they are overwight, reduce their food stamps by the same amount so they become healthier and save money. You are out of touch with reality and what needs to be done to increase the pride and self respect of all people. Weldare work can have it’s own set of rules/laws and there is always something someone could do to help out and not put people out of work…You, and your thinking are why problems fester and continue to grow…Open your eyes!

  • Jerry Johnson

    Maybe it is time for the Gov to take a page from President Obama and use an end run aropund the legislative process in this one.. It may be the only way he can get it past the Union Special interests.
    Since they make 15% more than non union workers maybe they should contribute more to their pensions and it might be a good idea to tie State jobs to compensation for similar private sector jobs. After all the tax payer are on the hook for their salaries.

  • Pat W.

    I am a state employee working at a forensic psychiatric facility with 1200 mostly men & some women who are mentally ill & have committed crimes. Many of the men come to us from jail & prison. Some are faking mental illness so they don’t have to stay in prison. It is dangerous work where many staff are injured by assault, including one who was murdered last year. I believe that you can’t lump all state workers into one neat plan to reduce money for retirement. The unions for the gun & badge state workers have gotten tremendous amounts for pension. We have just gotten off furlough days with 4 less paid days per month. I will be putting in 5% more of my paycheck for retirement Jan. 1, 2012. My union has not been able to protect us from the previous governor’s executive decisions to take away my income. I didn’t even want a union when I first started with the state–didn’t understand why I needed one. 22 years later, I now understand why unions can help protect state workers who are placed in dangerous situations every day & are called on to fix CA deficits that we did not create. Not all state workers are the same.

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