The State Worker

Chronicling civil-service life for California state workers

August 28, 2012
Jerry Brown, Democrats reach deal on public pension overhaul

Gov. Jerry Brown and state lawmakers have reached a deal that will alter pensions for hundreds of thousand of local and state workers.

Brown will announce an agreement that promises future employees less and requires many of them to pay more for it than their tenured colleagues, according to details of the plan leaking out this morning.

Brown is scheduled to talk about pension reform tat an 11:30 a.m. Los Angeles press conference. The Democratic governor made cutting public pension costs a key piece of his administrative agenda and has insisted that voters insist on reform before they'll embrace a tax hike on the November ballot that Brown is backing.

Here are the components of the agreement reached between state lawmakers and Brown, according to sources familiar with the agreement. The terms would begin to take effect Jan. 1.:

• As reported Monday, the salary of future hires that will be considered for pension purposes will be capped. The ceilings: $110,000 for employees who participate in Social Security and $130,000 for those who don't, such as fire fighters, police and teachers.

• Brown's proposal to put new hires in hybrid pension plans won't happen. Instead, the pension formulas for new hires -- both safety workers such as police and firefighters and miscellaneous employees -- will be rolled back.

• New employees will pay half of their normal pension costs. Employers would still have to bargain contribution rates for current employees.

• The exact pension formulas for those new hires weren't made available to The Bee, but one component is now known: the age factor. Miscellaneous employees -- the largest category of workers -- would have to wait until their 67th birthday for maximum retirement benefits, compared with age 62 for most current workers. Future safety employees -- including police, firefighters and prison officers -- would would have to wait until age 57 to qualify for maximum benefits. Depending on their employer and contract, current employees in those jobs can retire as early as 50 years old and receive maximum benefits, although that happens relatively little.

Lawmakers embraced several proposals Brown made earlier this year, including:

• Pensions will be figured using a three-year salary average that includes only regular recurring pay.

• Retirees can work a maximum 960 hours per year.

• Felons will lose their pensions.

• No more retroactive pension enhancements.

• No more "pension holidays" that allow employers and employees to skip contributions when pension funds are flush.

• Additional service credit purchases will be eliminated.

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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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