Fulfilling a campaign promise he made to California voters last year, Governor Edmund G. “Jerry” Brown, Jr. released his “sustainable” pension reform plan for public employees throughout the Golden State.
The governor’s plan includes 12 major reforms for state and local pension systems that would end system-wide abuses and reduce taxpayer costs by billions of dollars over the long term, according to the governor’s press office.
Among Brown’s proposals: increase the retirement age, require employees to share pension costs, establish a new, stricter limit on post-retirement employment and end the practice of “spiking,” a tradition of raising salary rates for employees in their final year as a way to increase pension benefits.
As candidate, Brown called for a series of reforms to stabilize California’s public employee retirement system and protect taxpayers, retirees and current employees, which became troubled after losing millions when its Wall Street investments tanked.
“State government has to honor commitments that have been made, but we have a responsibility to taxpayers and to retirees themselves to make certain that we can withstand sudden meltdowns in the markets without overburdening an already strained state budget,” Brown said during the campaign. “We have to be realistic about what the state can afford, and put an end to abuses of the system that cost millions.”
As governor, Brown outlined what would become his pension reform plan during the budget negotiations in March of this year.
Brown offered 8 reform proposals as candidate but today’s plan includes 12 reforms, most notably raising the retirement age from the current 55 to 67 years old.
“I can tell you there’s a lot of great years left in your 70’s,” mused Brown who, at 73, is the oldest governor currently serving in the United States.
“It’s time to fix our pension systems so that they are fair and sustainable over a long time horizon,” said Governor Brown. “My plan raises the retirement age and bans abusive practices like ‘spiking’ and ‘air time’ while mandating that public employees pay an equal share of pension costs.”
Public employee unions responded to Brown’s plan by noting they have negotiated reforms that have saved the taxpayers nearly $600 million in the past two years alone.
“Gov. Brown’s proposal starts the conversation on retirement security that will help shape the future for the millions of people reaching retirement age,” said SEIU President, Yvonne Walker and California Highway Patrol Executive Officer, Jon Hamm, in a joint statement released shortly after Brown’s press conference.
“We’re paying more, working longer, and earning less … like most Americans,” Hamm said. “Public and private pension funds were hit hard when Wall Street used our retirement money to fund their extraordinary greed.”
“A new UC Berkeley study shows that nearly half of all Californians are headed into a retirement of poverty,” added Walker. “In this day and age, that’s just wrong.”
Brown’s plan also would commit all public employees to a forfeiture of pension benefits if convicted of a crime while working for the state. The forfeiture would apply only to the time during which the criminal activity occurred.
“We support curbing abuses and putting an end to special deals like those in the City of Bell,” Walker and Hamm said. “At the same time, we cannot jeopardize the secure retirements of hard working Californians whose modest pensions are often the difference between living out their years in security and retiring into poverty.”
“We believe it’s time for a new conversation about retirement security for all Californians, especially as California and the nation struggle to untangle the mess caused by Wall Street’s financial malpractice,” the employee union statement read.
Assembly Republicans responded to the release of Brown’s pension reform proposal, calling it a plan that “embraces ideas that Republicans have pushed for years,” and urging the Governor to encourage Sacramento Democrats and public employee union bosses to get on board with a tough but necessary pension reform plan.
“There’s no question that we must take immediate action to curb the state’s rocket-fast growth of public pension obligations,” said Assembly Republican Leader Connie Conway, of Tulare. “These unfunded obligations may be as high as $500 billion, which means every dollar we have to spend on pensions is money we won’t have in the future to spend on education for our children or critical services for Californians in need. Pension spiking and other abuses must be ended to so that retirees receive fair compensation for their public service without bankrupting our state, schools and local governments.”
Conway said that Assembly Republican would fight to ensure that voters have the final say on any pension reform plan enacted by the Legislature.
Asked what he thought is the likelihood his plan will be passed by the legislature, Brown said he understood the plan would be “Chewed on in the legislature, and I certainly welcome that,” but cautioned, “The legislature is well advised to take this very seriously and get it on the ballot.”
“We believe it’s time for a new conversation about retirement security for all Californians, especially as California and the nation struggle to untangle the mess caused by Wall Street’s financial malpractice,” said Walker’s and Hamm’s joint statement.
The governor’s proposal can be found here.
(This article first appeared at California Progress Report)