November 6th, 2009, 1:34 pm · 158 Comments · posted by Teri Sforza, Orange Cty Register staff writer
Tapping in to public outrage over gold-plated public employee pensions, the California Foundation for Fiscal Responsibility filed two reform initiatives with the state Attorney General’s office on Thursday.
“With more than $200 billion in retirement debts and skyrocketing costs crowding out the investments we need in education, health care, transportation, public safety and the environment, it is time for a statewide solution to our retirement benefits crisis,” said foundation president Marcia Fritz in a prepared statement.
“By requiring all new non-safety public employees at all levels of government to work until their Social Security retirement age for full benefits and ending the politicians’ raids and abuses of public pension funds, California public agencies can offer secure retirement benefits that are fair for taxpayers and their employees,” she said.
The Public Employee Benefits Reform Initiative would apply a benefits cap to the benefit plans offered to all new state, local government, school district, university and special district employees beginning July 1, 2011.
Early estimates show the initiative would save more than $1 billion the first year, and $500 billion over 30 years, as new workers replace those who retire.
How? By raising the age at which workers can retire with full benefits, and by limiting guaranteed benefit formulas to 75 percent of pay for a full career’s work. ”Significant additional savings would come from requiring new employees to wait until they reach MediCare eligibility age before supplemental retiree health benefits begin,” the foundation says.
The “Ten Commandments” of both versions of the initiative include:
- Honor all pension contracts
- Death and disability benefits shall not be changed
- Pension benefits must be fair and adequate
- Pension benefits must be guaranteed
- Pension spiking abuse must be discouraged
- Future generations should not pay retirement costs for today’s workers
- Retiree health funds must not be diverted to any other purpose
- Retirement benefit costs must be sustainable
- Local agency voters shall retain the right to change benefits
- Bankruptcies must be avoided
After ballot language is approved by the state, the foundation will gather signatures to place it on the 2010 ballot. Judging by the vitriol around public pensions as of late, that shouldn’t be hard to do.
“California’s huge legacy retirement costs have been aggravated by pension benefit enhancements granted to public employees over the last 10 years combined with average pay increases of 50 percent to 70 percent both at the state level and among local agencies,” said Fritz in a press release. “Actuaries did not anticipate wage hikes of this magnitude, nor did they expect the market losses that have seriously reduced the value of pension assets set aside to pay for pension benefits. Workers are retiring earlier because many can receive more in retirement than while working. Defined benefit plans are viable tools if they are not abused, but generous guaranteed retirement benefits plus high wages have overburdened our public pension systems and ultimately our taxpayers.
“Sound fiscal policy, simple budget planning, and retirement benefits that ensure a dignified and secure retirement after a full career of public service are all possible, and this initiative will help lead the way for all levels of California government.”
Submitted by: Jim Wagner
5 comments:
Ms. Sforza, the OC Register reporter,is also looking into city council pay/benefits in Orange County cities. Should be an interesting read.
If you look at Pacifica's budget, you see that the only items rising rapidly are the benefits of city employees and the city council.
The percentages are striking, and a result of contracts signed over the last two years. Next years' budget process is going to be worth paying attention to, as we are certain to see proposals to cut services further.
All City services should be outsourced. PERIOD! Total compensation for City employees has become prohibitive. It's a hard reality of life, but one many of us in the private sector have had to come to terms with.
Lionel, I appreciate all the work you've done on this subject. This council shows an overall lack of respect for the public process, a disturbing sense of entitlement, and a general cluelessness on what's appropriate when you're asking others to cut so much.
That said, while I appreciate what it tells me about the council, isn't this an almost insignificant drop in the overall budget bucket?
Lionel,
Great work, you and I see eye to eye on this. I'm going to go out on a limb and do something unusual . . . defend City Council. Only a smidge. Every pay and benefit increase was put on the Consent Calendar and obscured from the public view. This was done by our current Finance Director, not our former one (you know, the one that was "downsized" despite her years of experience because she was giving information to the public.) I'm not sure all of City Council even knew or understood what these changes meant, just that they were recommended by staff and they approved them.
Of course, all the staff salary and benefit increases were slipped on to the Consent Calendar as well, but this is the government Pacifica has voted for.
The process by which money matters were slipped through on the consent calendar goes back to 2001. And that's only what Vi Gotelli and yours truly have looked at--it's not everything.
Yes, the council pay/benefit package is a comparative drop in the bucket. But what does the process by which they got what they have indicate? Is this how the money has been spent without the public being aware of it?
And keep in mind, all council members since that time are implicated, they simply didn't want to expend the effort finding out what things meant. It's called laziness.
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