Governor Brown and Democratic leaders in the Capitol reached an agreement on pension reform Tuesday, as details of a compromise package began emerging. Among the changes in store for public employees is a two-tiered defined-benefit system, increased contributions, and an increase to retirement ages.
Along with the package of reforms was a pledge from Senate Pro Tem Darrell Steinberg that the reform effort will not stall in the Democrat-controlled Senate.
“There will be votes on our respective floors on comprehensive pension reform on Friday before the constitutional deadline for the end of session,” Senator Steinberg said in a press conference in the Capitol Monday night.
Steinberg went a step further on KFBK, a Sacramento talk radio station, on Tuesday morning, when he made a “Pro Tem promise” that it wouldn’t stall.
“If the legislature approves these reforms, public retirement benefits will be lower than when I took office in 1975,” said Governor Brown. “Additional changes would require a vote of the people,” he added.
A vote of the people was exactly what San Jose Mayor Chuck Reed asked for in response to the pension reform deal.
“California needs a constitutional amendment to ensure that the changes aren’t undone by future legislatures and to affirm the ability to make changes to retirement benefits for future work while protecting vested rights employees have already earned,” said Mayor Reed.
The reform package will require that all public employees – both current and future – contribute at least 50 percent of the normal cost of their pension benefits. That change will go into effect immediately for new employees, and will be used in negotiations for current employees. Employees would also have their pensions calculated based upon a three-year average of regular pay.
Most changes will affect new hires only.
New, miscellaneous hires will face a minimum retirement age of 67 to their full benefit calculation of 2.5 percent. They will be eligible at age 62 with 2 percent. Public safety employees won’t reach retirement until age 57, and will have their pension calculated at a 2.7 percent rate.
The reforms also prohibit retroactive pension increases for all employees, pension holidays for all employees and employers, and prohibits purchases of service credit for all employees.
Felons would lose their pensions all together.
The Bay Area Council and the Silicon Valley Leadership Group commented on the reform plan.
“Make no mistake, this does not go as far as the Leadership Group and Bay Area Council think California needs to go, but it certainly includes several steps in the right direction,” said Carl Guardino, President and CEO of the Silicon Valley Leadership Group. “We believe more steps still will need to be taken, which is why we’re having the details of today’s announcement independently analyzed.”
Others are simply saying that this version of pension reform has fallen short of the 12-point plan presented by Governor Brown.
“You can’t fix years of poor policy without deep consideration and sacrifice,” said one pension board member who asked to remain nameless. “Pensions, particularly in California, are large bureaucracies with lobbyists to protect their interests.”