The State Worker

Chronicling civil-service life for California state workers

August 31, 2012
California Legislature sends public pension overhaul bill to Jerry Brown

MC_LEGIS_05A.jpgOver loud objections from organized labor and Republicans, the Legislature has approved a state and local public pension overhaul package that rolls back benefits for future hires while raising what those workers and current employees contribute to their retirements in coming years.

Lawmakers sent the bill to Gov. Jerry Brown on a 38-1 vote in the Senate and 48-8 vote in the Assembly. Democrats, who control majorities in each chamber, barreled ahead with the vote just ahead of the end-of-session deadline after issuing language for the measure Tuesday evening.

Assembly Republicans tried and failed to suspend the measure or at least hold it up while a bill catch-up to close a loophole discovered on Wednesday. They also argued that Assembly bill 340 was a rush job and doesn't do enough to change the pension system.

"Can anyone say what this bill does?" said Assemblyman Jim Nielsen, R-Gerber.

Assembly Speaker John A. Pérez, D-Los Angeles, countered that the legislation came from months of discussions and represents a refinement of a 12-point pension plan Brown proposed earlier this year. Republicans backed Brown's plan.

"It is meaningful, significant, historic reform," Pérez said.

A revised estimate by CalPERS released on Friday morning pegged savings from the measure at between $42 billion and $55 billion over 30 years, or $12 billion to $15 billion in inflation-adjusted dollars.

The changes will save just $146 million next year. As employers hire new workers under lower retirement benefit schemes, their pension savings would grow to $1.2 billion by the 10th year, CalPERS figures.

Assembly Bill 340, authored by Assemblyman Warren Furutani, D-Gardena, would apply immediately to state or local government employees hired after Jan. 1, 2013. The measure sets caps on how much of their pay can be counted toward their pensions, rolls back the formulas used to calculate those benefits and pushes back the retirement age.

Those new workers would also share half the normal cost of their pensions with employers. Current employees also would pick up at least half of that cost within five years through collectively-bargained agreements. After that, employers could impose the 50-50 split.

Other provisions aim to curb pension spiking and other abuses while changing some politically-explosive aspects of current pension law, such as allowing employees to purchase additional service time to enhance their retirement payouts. The measure suspends pensions for felons whose crimes are job-related from the day of the offense forward.

The state has already adopted nearly all of the bill's provisions for its employees through collective bargaining. Cities, counties and other local agencies have generally lagged the state, CalPERS said in its analysis, so the measure will impact them more.

Photo caption: Assemblywoman Connie Conway, R-Tulare, talks with assembly speaker John A. Perez, D -Los Angeles after the vote on pension reform at the state Capitol on Friday. Photo by Manny Crisostomo.

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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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