By Dave Low.
Public employees have the most at stake in the discussion about the health of public pension systems. That’s why, despite the measure proposed by San Jose Mayor Chuck Reed being pulled from the November statewide ballot, public employees will remain actively involved in the conversation. We’re not celebrating. Neither are we shying away from this difficult discussion. We’re asking what we can do next to help.
The political stage — theater fueled by big money donors and inflammatory TV ads — was the wrong venue to have this important discussion. The state’s teachers, firefighters, police officers, garbage truck drivers and other public employees are willing and eager to negotiate — but the proper venue for doing so is the bargaining table.
In fact, that kind of progress is being made through collective bargaining all across the state. According to CalPERS, public employee unions in nearly 400 municipalities have agreed to over 600 changes to their labor agreements in recent years. The concessions include paying more into our own retirements, agreeing to reduced formulas, and even raising the retirement age. For example just last year, city workers in Whittier and public safety workers in Rialto agreed to increased cost-sharing. However, that kind of bargaining rarely earns newspaper headlines.
Public employees have shown they are willing to do their part to help balance government budgets. We may not have liked the pension system overhaul Governor Brown signed in 2012, but once it became law our union leaders helped to implement the changes, which will amount to a reduction of more than $77 billion to public workers’ retirement and health care benefits.
Another example is the discussion over how to solve CalSTRS’ long-term funding needs. The Legislature has recently taken up the issue, holding hearings to address the estimated $71 billion shortfall. The California Teachers Association set the tone by acknowledging that increased contributions from educators must be part of the solution.
Public workers’ willingness to participate in this conversation is not met by a similar willingness from Reed, whose term as mayor of San Jose ends this year. Reed and his out-of-state billionaire backers (the seed money for his ballot measure came from Texas gas trader, hedge fund manager and former Enron executive John Arnold) simply say they will come back in 2016 with the same political tactic.
Meanwhile, California’s largest pension funds continue to show healthy returns, blowing holes in the bogeyman argument over “unfunded liabilities.” Both of the state’s public employee retirement systems projected returns of 7.5 percent on their investments in 2013. The naysayers said that forecast was far too optimistic. However, Calpers showed a 16.2 percent return and CalSTRS earned 19.1 percent. And that’s not an anomaly; CalPERS has averaged better than 8 percent returns annually over the past two decades despite the recession. Before long, all the water will have drained out of the “unfunded liabilities” argument.
What won’t have changed is the fact that public workers in California are hard-working, middle-class individuals who serve their communities knowing they will never get rich. Over the course of their careers they earn less in salary than if they worked in the private sector, and when they retire they do so modestly. The average public employee pension in California today is just $31,000 a year. Most retire on less than $18,000, which is just 50 percent over the federal poverty level.
That’s why public employees are not waiting two years to have this conversation. Teachers, public safety officers, and other municipal workers understand the importance of continuing the discussion today, furthering the progress that has already been made, and we’re asking ourselves how we can best help to do that.
Dave Low is the Executive Director at California School Employees Association.