The State Worker

Chronicling civil-service life for California state workers

July 26, 2011
Pension measure creates 'CalSPERS' for private sector employees

JD_TED_COSTA_MUG.JPGAnti-tax advocate Ted Costa is back at it. His latest target: pensions.

He has proposed an initiative, written by Robert Matteoli, is called the Pension Solvency Act. It would significantly scale back benefits for current and new employees, give the state controller broad authority to audit the state's pension systems and orchestrate the creation of CalSPERS -- a pension system for the state's private sector employers.

"We want an opportunity to show everyone around this state what real reform is," Costa said. "I don't like the idea of shutting down the pension system. For better or worse, we have this. Let's put it back together."

Some of the specific changes Costa calls for:

  • A progressive tax on pensions above $60,000. For example, someone with a $65,000 pension would be taxed at a 5 percent rate that would keep $250 inside retirement funds deemed insolvent until the fund is solvent.

  • A ban on pension spiking.

  • Cutting cost-of-living adjustments in half until pension systems are solvent.

  • Barring public agencies from shortchanging the pension systems on annual contributions.

  • Requiring, within 30 days of passage, the Attorney General to ask federal prosecutors to investigate CalPERS officials for any sort of financial wrongdoing. Anyone who gets a pension of more than $250,000 also would be subject to investigation.

  • Subjecting new employees to a $100,000 base pay cap, with COLA -- for purposes of calculating pensions.

  • Requiring CalPERS, within one year of the measure's approval, to set up the California Separate Private Employees Retirement System (CalSPERS). It would be a defined-benefit program paying beneficiaries 2 percent per year at age 63. Costa envisions 8 percent annual contribution by employers and 8 percent by employees. He said within five to 10 years, most private companies would join this.

  • Requiring all state and local public pension systems to offer only a defined-benefit program.

  • Increasing the retirement age to 59.5 years old for all public workers, Costa said that provision is unconstitutional and plans to remove it in a new version.

Costa's full proposal is available as a PDF here.

Once the attorney general's office writes a title and summary for the measure, it will head to the secretary of state's office, which would have to okay the start of a signature-gathering campaign. Costa said he doesn't have anything close to the $1 million needed to gather signatures and that he recognized a measure as complicated as this one would be easy to attack.

"We offer this as realistic model of what has to be done to let firefighters, police officers have pensions in 15 years or more," Costa said. "Otherwise, it'll be gone. They'll have nothing."

Costa said he predicts the proposal would infuse $3 billion to $4 billion annually into the systems.

"I believe Jerry Brown will like this initiative," Costa said. "And I'll know that because he'll be silent about it."

Costa's most recent initiative proposal before this one failed to gather enough signatures before a July 5 deadline. That measure would have apportioned the state's Electoral College votes on a district-by-district basis, giving the state's Republican voters significantly more clout in presidential elections. Costa's political action committee has only a few dollars in its account, according to the most recent disclosure filings.

"We thought we had funding for it, and it didn't come through," he said.

PHOTO CREDIT: Ted Costa of the People's Advocate testifies at an Assembly Committee on Labor and Employment hearing in June 2004. (Sacramento Bee/ John Decker).

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About The State Worker

Jon Ortiz The Author

Jon Ortiz launched The State Worker blog and a companion column in 2008 to cover state government from the perspective of California government employees. Every day he filters the news through a single question: "What does this mean for state workers?" Join Ortiz for updates and debate on state pay, benefits, pensions, contracts and jobs. Contact him at (916) 321-1043 and at jortiz@sacbee.com.

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