The State Worker

Chronicling civil-service life for California state workers

October 17, 2013
Chuck Reed scheduled for Bay Area, Los Angeles radio shows

100610 microphone.JPGSan Jose Mayor Chuck Reed is scheduled to discuss his new public pension ballot proposal on two radio shows today.

Reed and Robert Sapien Jr., president of San Jose Fire Fighters Local 230 will discuss pensions on KQED's "Forum" at 9 a.m. (Listen live here, or click in later for archived audio.)

A couple hours later, Reed is scheduled for "AirTalk" on Southern California's KPCC to debate with Terry Brennand, representing union coalition Californians for Retirement Security.

Click here to listen live from 11:20 a.m. to 11:40 a.m. The audio file will post on the station's website a little after 1 p.m. Go to the "AirTalk" webpage and scroll down to find the archive link.

IMAGE: www.freeclipart.com

October 16, 2013
CalPERS weighs in on new public pension ballot proposal

100607 CALPERS HQ.JPGOfficials with California's massive public pension fund, CalPERS, issued a press statement Wednesday on the new proposed ballot initiative on public employee pensions that restates the long-held position that those pensions are deferred compensation and a vested right under both federal and state law.

"CalPERS is bound by fiduciary duty to deliver the promised pension benefits according to the U.S. and California Constitutions, statutory law and case law," the release says. "The California voters placed these protections and duties in our Constitution to ensure that employees' pensions would be protected by CalPERS as their fiduciary and trustee. CalPERS will continue to support and defend our members' vested rights, in accordance with the laws of the land and our obligations under the federal and State constitutions."

Rather than downgrade pensions for government employees, CalPERS says, "a better solution would be to help those without pensions find ways to save for retirement ... Changes to pension benefit levels should be determined by the employer and the employees, and not at the ballot box. If this initiative were to pass, then all contractual rights in California could be in jeopardy."

You can find the full statement on the fund's website.

PHOTO: CalPERS headquarters in Sacramento. The Sacramento Bee/Jay Mather

October 16, 2013
From the notebook: More quotes on California's public pensions

NOTEBOOK_use_this.jpgAs reported in today's Bee, the battle lines have been drawn now that a new group led by San Jose Mayor Chuck Reed has filed papers to put a public pension measure on the November 2014 ballot.

What follows are quotes that didn't get into today's story or Tuesday's breaking-news blog post.

October 15, 2013
VIDEO: Chuck Reed's public pension talk at Hoover Institution

Here's video of San Jose Mayor Chuck Reed's keynote address on public pensions at Stanford's Hoover Institution on Wednesday, Oct. 9.

As we reported last week, Reed said during a Q&A after his presentation that he would soon file papers to put a public pension measure on California's statewide ballot. That part of the video starts at roughly the 24-minute mark.

Reed, a Democrat, is proposing an amendment to the California state constitution that would allow state and local government employers to cut pensions prospectively for all employees, while pensions already earned would be protected.

October 10, 2013
San Jose mayor says he'll file pension initiative language soon

131010-chuck-reed-courtesy-san-jose.jpgSan Jose Mayor Chuck Reed said Wednesday that he will soon file papers to place a public pension measure before voters.

'I hope we'll in the position of filing for the title and summary in a few days," Reed said during remarks at Stanford University's conservative Hoover Institution.

The Democratic mayor said that "time is of the essence" for cutting government pension obligations that he says have strained municipal budgets statewide. For several months Reed has been recruiting support for a measure that would alter California's constitution so that state and local governments could lower pensions prospectively for current employees, while keeping their earned benefits intact.

Prevailing legal wisdom says that retirement promises to current employees are constitutionally protected. A voter-approved rollback for San Jose city employees that Reed promoted is testing that theory in court.

Although lawmakers last year dialed down retirement benefits for new hires and required most current employees to contribute more toward their retirement funds, "we have to go further than the Legislature did in 2012," Reed told the Hoover audience.

Unions have rejected Reed's ideas and have challenged the San Jose law in court. A statewide measure would undoubtedly trigger a massive response from organized labor a la its successful campaign to defeat a 2012 initiative that would have made member-dues collection more difficult.

Experts figure Reed will need between $2 million and $4 million to collect the 1.3 million signatures required to qualify the measure for the November 2014 ballot. There are signs that a Texas millionaire is willing to kick in to the cause. Silicon Valley money from conservative backers such as Charles Munger Jr. could pour in as well.

PHOTO: Chuck Reed. Courtesy City of San Jose.

October 4, 2013
Jerry Brown sues U.S. Labor Department over pension law

As he announced last month, Gov. Jerry Brown today sued the U.S. Department of Labor over its ruling that California's new pension-reform law violates mass-transit workers' collective bargaining rights.

The Sacramento Regional Transit District joined Brown's Department of Transportation as a party to the complaint which seeks to overturn federal decisions that have withheld $54 million from the Sacramento district, including $14 million for light rail construction to Elk Grove that cannot be recovered.

A 1964 law requires that the Labor Department certify agencies are preserving their employees' collective representation as a condition of receiving federal mass-transit grants.

September 23, 2013
San Jose mayor backing ballot measure to roll back pensions

A new push to ask California voters to let state and local governments roll back pensions for current employees is taking shape, with San Jose Mayor Chuck Reed leading the charge.

In a telephone interview Monday evening, Reed said that he recognizes the economic pressure on state and local budgets has eased and that he hasn't raised any money yet, but that he is convinced the need remains to dial back public pension costs.

"I'm not seeing signs that the public thinks this isn't a problem that has to be dealt with," the Democratic mayor said, noting that pension costs have been in the spotlight for financially struggling cities such as San Bernardino, Stockton and Detroit.

Language for the proposed ballot measure is still in the formative stages, he said, but it would ask voters to change California's constitution to explicitly allow state and local governments to alter pensions going forward for current employees.

Reed said he has been meeting with mayors across the state, and his calendar shows that he has been in discussions with several pension reform crusaders, including Dan Pellissier, who led a group that unsuccessfully tried to put a pension measure on the 2010 ballot. That effort failed to raise enough money to gather qualifying signatures.

Unlike previous proposed measures that never reached voters, Reed's measure wouldn't mandate a one-size-fits-all change to pensions. Instead it aims to settle a state constitutional question about whether public pensions may be altered prospectively once promised to employees.

"I'm not trying to be prescriptive," Reed said. "We need to empower local governments."

The default assumption for years has been that the state and U.S. constitutions protect pensions as a contractual agreement and a vested property right. That has meant that rollbacks to pension formulas, including the less-generous package mandated in a pension law that Gov. Jerry Brown signed last year, affect only new employees. Reed's measure would not address federal law.

Governments could enhance pension formulas retroactively, and did, until the new pension law forbade it this year.

Reed and others say that those changes, while necessary, don't go far enough. They contend that the more generous pension formulas that have kicked in over the last 14 years and the Great Recession delivered a double-whammy to pension funds. Altering pensions for current workers, Reed says, is the only way to address projected shortfalls that run into the hundreds of billions of dollars.

Steve Maviglio, a spokesman for the union-backed Californians for Retirement Security, called Reed's idea a "radical attack on the retirement security of teachers, firefighters, police officers and other public servants."

"Because he is incapable of providing the leadership to solving pension issues at the bargaining table and in the Legislature," Maviglio said in an email Monday, "Mayor Reed has decided to try to advance his political career by going to the ballot box in a costly campaign."

September 10, 2013
August retirement applications to CalPERS down slightly

The number of California state workers who applied for pensions declined less than 2 percent last month, according to CalPERS, but the retirement trend since January remains higher than in 2012.

Meanwhile, the number of all retiring CalPERS members -- state and local government, school district and special district employees -- rose nearly 12 percent in August. The number of all CalPERS retirements is up nearly 4 percent this year for the combined group of state and local government, school district and special district employees.

The gradual increase in the overall retirement numbers so far this year suggests that the slumping economy, furloughs that cut pay, layoffs, and (for local governments) early retirement incentives of a few years ago have washed through the government ranks. Still, employers expect to see the upward retirement trend continue as aging baby boomers head for the exits.

The state employee figures for the last few months of this year will bear watching as a bellwether for how a new round of raises negotiated with Gov. Jerry Brown will affect retirements. Will some workers who might have left with no prospect of a pay increase might decide to stick around enough for the higher pay to affect their pension checks?

Click here for detailed tables of month-by-month retirement application numbers tracked by CalPERS dating back to 2007. The fund counts applications from mid-month to mid-month. The last two weeks of December, when many state workers leave to take advantage of cost-of-living allowance rules, are counted in the January tallies.

September 6, 2013
Read bill exempting mass-transit workers from pension reform

DICKINSON-lg.jpgAs we've reported, Gov. Jerry Brown is backing legislation to exempt California mass-transit employees from his pension-rollback law while the courts decide whether it violates federal collective-bargaining conditions for mass-transit grants.

Here's the legislation, Assembly Bill 1222, authored by Assemblymen Roger Dickinson, D-Sacramento, and Richard Bloom, D-Santa Monica. The bill is an "urgency" measure that needs two-thirds support in the Assembly and Senate to take effect immediately with Brown's signature.

September 5, 2013
From the notebook: Letter explains how California, federal laws conflict

thomas_perez.jpegAs we reported in a breaking news story on Wednesday and followed with a more detailed report today, the Brown administration has announced a plan that it says will allow federal grants to continue flowing to regional transit districts while the courts decide whether California's new pension law degrades mass transit employees' collective bargaining rights.

U.S. Labor Secretary Thomas Perez had warned Gov. Jerry Brown that at least $1.6 billion was at risk, because federal mass transit law requires agencies that receive certain federal grants protect their workers' collective bargaining rights. The Labor Department certifies whether employers are complying.

The warning became an official decision on Wednesday. Here's the letter from Michael Hayes, the director of the U.S. Department of Labor's Office of Labor-Management Standards, that explains why the Obama administration decertified the Sacramento Regional Transit District because it has implemented California's Public Employees' Pension Reform Act.

August 19, 2013
CalPERS state retirements up this year despite July dip

The latest data from CalPERS show that the total number of state employee retirements this year continues to outpace 2012, even though July's total dipped by nearly 5 percent year over year.

So far, 6,643 state workers have applied to take their service pensions, up more than 2.8 percent from the same seven-month period a year ago.

The trend is the same among local government and school district employees in CalPERS. The fund has received 19,282 pension applications overall this year, representing an increase of almost 2.8 percent from 2012. (Click here for detailed spreadsheets with seven years of CalPERS retirement data.)

Experts say that the rate of public employee retirements is returning to normal levels after several years of budget crises, furloughs, layoffs, buyouts and uncertainty over pension benefits prompted some employees to retire early.

August 13, 2013
From the notebook: California and federal laws about to collide

NOTEBOOK_use_this.jpgOur story in today's fiber/cyber Sacramento Bee explains the looming crash between California's Public Employee Pension Reform Act and a federal mass-transit grant law that makes the money conditional on preserving collective representation of mass-transit workers.

Congress tied the federal strings tied to mass-transit money with a 1964 law intended to protect private mass-transportation employees' collective bargaining rights. Struggling mass-transit operations around the country were shifting from private-sector control to the public sector at the time, and unions worried their members would lose vested pension benefits, the right to strike and power to collectively negotiate contracts if they became public employees.

Back then, unions were common in private industry, but relatively rare in government. (California didn't allow local government employees to organize until 1968. First-term Gov. Jerry Brown signed a collective-bargaining law covering state employees nearly a decade later.) And then, as now, state and local government employers were expressly exempt from the National Labor Relations Act.

Today unions are much more prevalent in the public sector and have nearly disappeared on the private side.

Some links and embedded documents that add history and more details to today's report:

"Bill would exempt thousands of California public employees from pension overhaul" (Jan. 29 Sacramento Bee report)
Assembly Bill 160 analysis. The measure would exempt public mass-transit employees from pension reform.
"Brown aide defends pension reform for mass-transit workers" (Feb. 21 State Worker blog post)
Background on the Federal Transit Act, Section 13(c)
Legal Research Digest: "Transit Labor Protection -- A Guide to 13(c) Federal Transit Act"

And here's the memo from Los Angeles County Metropolitan Transit Authority CEO Arthur Leahy that includes a list of MTA projects at risk and a letter from U.S. Labor Secretary Thomas Perez to Gov. Jerry Brown warning that the feds are prepared to cut off funds:

August 1, 2013
California state workers who retired in July at seven-year low

The number of California state workers who retired during the month of July is at a seven-year low, dropping 54 percent from its peak in July 2010.

However, while the summer monthly numbers have been lower than in previous years, the overall number of retirees for 2013 so far is higher than for the same period last year due to a large number of workers retiring at the beginning of the year.

So far 6,643 state workers have retired this year, a 2.8 percent increase over the same time period last year.

As baby boomers continue to leave the workforce, CalPERS has seen dramatic increases in the number of state workers who are retiring.

The past three years have seen an average of more than 10,900 state workers retire each year. That's up from the previous three years: From 2007 to 2009, an average of nearly 8,400 workers retired each year.

Across the entire CalPERS system, which includes state, local and school district employees, 19,282 workers have retired so far this year, also up 2.8 percent over the same time period last year.

We've embedded the latest spreadsheets and charts below, which include CalPERS data for state, local and school district pension applications and state-only applications. Applications are counted from mid-month to mid-month.

Here is the data:

July 22, 2013
CalPERS to host retirement fairs

Thumbnail image for Thumbnail image for CALPERS_COURTYARD_JAY_MATHER_2005.JPGCalPERS will host a couple of two-day events in August and September intended to help members plan their financial futures.

The agendas include breakout sessions on a variety of topics and CalSTRS will also have a table at the fairs.

CalPERS will webcast and archive online four sessions the Sacramento event: benefit basics, health benefits, the service credit factor and the Savings Plus program.

Both retirement fairs are free and open to all state government, local government and school employees in the CalPERS system.

The dates, locations and times:

August 23-24
Sacramento Convention Center
1400 J Street
Sacramento
8:30 a.m. - 4:00 p.m.

September 13-14
The Westin Long Beach
333 East Ocean Blvd.
Long Beach
8:30 a.m. - 4:00 p.m.

Click here for more information and to register.

PHOTO: CalPERS' courtyard at its Sacramento headquarters. The Sacramento Bee/Jay Mather.

July 12, 2013
Blog Back: The CalPERS pension database

130711-blog-back.JPGBlog backs review your thoughtful and provocative online comments, amplify points, answer questions, correct our mistakes and humbly accept your warranted criticism.

News this week that CalPERS planned to launch a retiree pension database on its website -- and then delay it -- drew hundreds of comments on this blog and on Thursday's more expansive news story. A sampling:

July 8 CalPERS to disclose retiree pensions on website

Shame on CalPERS Board and its executive staff for deciding it wasn't important to first notify its retirees. Posting online retiree names, pension amounts and their last employer is not the problem. CalPERS has decided to give out more information than what is released about active state employees. You are creating a serious security issue for elderly retirees.

Since CalPERS wants to be transparent, it should include in that online database 1) the employee names, positions and the amounts of the bonuses of those who receive those bonuses; 2) the names, positions, and pension amounts of those who received $10,000 or more final comp due to a bonus and/or a large leave credit when they retired; and 3) the names, positions, and pay of those employees who retire and are rehired as retired annuitants and consultants. Taxpayers should know that senior managers are the lucky recipients in all three groups.

At least one retiree group knew about the database. Check out page 7 in the July edition of the California State Retirees' newsletter.

July 11, 2013
California state worker retirements up 4 percent in 2013

The number of California state employee retirements rose 4 percent during the first half of this year when compared with the same period in 2012, according to the latest data from CalPERS.

Meanwhile, retirements by all state, local and school district employees in the pension system rose a little over 8 percent.

July 8, 2013
CalPERS to disclose retiree pensions on website

CALPERS_COURTYARD_JAY_MATHER_2005.JPGCalifornia's mammoth public retirement system will fire up a new searchable pension database this month, according to a notice sent recently to member organizations.

The database will provide retiree information that is considered public: pensioners' names, their monthly gross pension payment, their base allowance, the Cost of Living Adjustment, their years of service, when they retired, their pension benefit formulas, final compensation and last employer.

July 5, 2013
Read the agreement for CA Department of Water Resources raises

On Wednesday, the International Union of Operating Engineers and the state reached an agreement to raise the pay of select water department workers.

The agreement affects the pay for job classes which that state says it has had difficultly staffing due to wages that are below what is being paid by other agencies. The raises range between 17.9 and 37.4 percent and are effective immediately.

Read the agreement and transmittal letter below.

July 3, 2013
Jerry Brown grants raises for some water department workers

Jerry Brown 2012 amezcua.jpgGov. Jerry Brown has agreed to increase pay by up to 37 percent for water department workers in positions the state has had difficulty staffing.

Brown and representatives from International Union of Operating Engineers (IUOE) finalized an addendum to the union's contract Wednesday to raise the pay by 17.9 percent to 37.4 percent for 741 employees for 34 job classifications in the Department of Water Resources. The raises are effective immediately and are estimated to cost the state $18.3 million.

State and union officials have said the raises are needed to prevent the drain of State Water Project employees to other higher-paying jobs. The vacancy rate in jobs responsible for running and operating the vast project has run between 10 percent and 15 percent for the last two years.

The agreement comes after California Water Commission Chairman Joseph Byrne warned of a staffing "crisis" in the department. In a April 23 letter to Resources Secretary John Laird, he noted some employees were being paid "65 percent below the industry's median."

In some cases, the state has spent $300,000 to $400,000 to train employees, only to see them lured away from state service by higher salaries elsewhere, department officials have said.

In effort to retain existing staff in the short term, the agreement prevents workers from immediately using the extra pay to bump up their retirement. The deal says workers cannot apply any of the raise toward their pension calculation if they retire before July 1, 2014 and only half of it if they retire before July 1, 2015. After that, their full salary could be used for pension calculations.

The agreement will affect 19 rank-and-file classes, three manager classes and 12 supervisor classes.

"As one of the largest utilities in the world, it is vitally important that the Department of Water Resources retain highly skilled professionals to ensure timely, efficient deliveries of water to 25 million Californians and thousands of farms and ranches," Richard Stapler, deputy secretary of the Natural Resources Agency, said in a prepared statement. "California's economy relies on a secure, reliable supply of water, and a loss of these professionals to other utilities could also cost the state millions of dollars in missed water deliveries."

PHOTO: Gov. Jerry Brown in 2012. The Sacramento Bee/Hector Amezcua

June 19, 2013
CalPERS approves lower pension rates for state, schools

130620-Piggy-BANK.JPGCalPERS' board has signed off on a plan to lower pension payments for California's state government and school districts by a combined $102.8 million for the coming fiscal year.

The state contributions will drop by $71.3 million, although a new public pension law requires $63.3 million of the savings go toward paying down its unfunded liabilities. That leaves the state with a net savings of about $8 million.

Schools will save $31.5 million on retirement benefits for classified employees.

Overall, the state will pay $3.9 billion for pensions in 2013-14. Schools will pay $1.2 billion.

CalPERS actuaries recommended lowering the contribution rates earlier this month, anticipating slower-than-expected salary and payroll growth and higher out-of-pocket contributions from employees under the pension law that took effect Jan. 1.

PHOTO: Piggy bank with clock. The Sacramento Bee file/Big Stock Photo

June 6, 2013
CalPERS report: State, schools pension costs will dip next year

Thumbnail image for CALPERS_COURTYARD_JAY_MATHER_2005.JPGA new CalPERS staff report says that pension costs for California state government and school district employees will fall by a combined $102.8 million for the coming fiscal year.

Overall state contributions will fall $71.3 million to approximately $3.81 billion in fiscal 2013-14, according to actuarial estimates prepared for CalPERS' June 18 board meeting. School districts will pay $4.98 billion for pensions, down $31.5 million from this year.

Actuaries anticipate pension costs will dip next year due to a combination of factors, including slower-than-expected salary and payroll growth and higher out-of-pocket contributions from employees under pension law that took effect Jan. 1.

The 2013-14 employer rates will kick in July 1, assuming the fund's board approves them.

May 30, 2013
Column Extra: California state retirement data details

As our State Worker column in today's fiber/cyber Bee notes, the pace of California state employee retirements is rising again due to a variety of factors. Some 5,086 state employees have put in their papers to retire this year, up from 4,809 last year.

May 16, 2013
Survey: Governments rely less on hiring freezes and pay cuts

A new survey finds that "the picture is brightening" for the state and local government civil service workforce as fewer employers resort to hiring freezes and layoffs -- although they're continuing to whittle away at employee benefits costs.

About one-third of state and local governments told the non-profit Center for State & Local Government Excellence that they're freezing pay this year. That's down from 51 percent in 2012.

Just 18 percent of government employers said they're laying off workers, compared to 28 percent that axed jobs last year.

Governments have continued making changes to health and retirement benefits, with 56 percent modifying health benefits in 2013 and 44 percent altering retirement programs. The change most often cited in both areas: shifting cost from the employer to the employee through higher contributions.

Meanwhile, 22 percent of employers surveyed said their retirement-eligible employees accelerated their retirement plans this year, the same as 2012.

Here are the survey results in detail. Click here to view the 2012 report for comparison.

May 10, 2013
University of California wants court to stop hospital strike

130419-UC-Davis-Med-Center-Pench-2012.jpgThe University of California said today that it will ask a judge to keep hospital workers from striking later this month.

American Federation of State, County and Municipal Employees Local 3299 says its members will walk off the job at the university system's five hospitals May 21 and May 22.

UC officials and the union have been in negotiations since last summer for a new contract covering some 13,000 patient care workers. The contract expired Oct. 1, and the contentious talks deadlocked earlier this year.

AFSCME says it's fighting to fix unsafe hospital conditions and foolish spending by high-level university officials who enrich themselves while seeking cuts to employee compensation.

The university counters that the union's real aim is to avoid new state laws that significantly reduce retirement benefits for new pension-system members.

This isn't the first time that AFSCME Local 3299 has threatened a walkout. In 2008, the union called a strike at all five UC medical centers. A San Francisco Superior Court judge issued a restraining order. The union ignored it and walked off the job for five days in July that year.

April 17, 2013
From the notebook: The CalPERS pension fund risk report

NOTEBOOK_use_this.jpg

Our story in today's Bee about why a CalPERS accounting change will cost state and local governments billions of dollars references a report about the fund's risk of extreme, even fatal, losses over the next 30 years. We've embedded the report below.

The story also mentions that the actuarial rule of thumb has long been that healthy pension funds' assets equal at least 80 cents of every dollar promised to members. What we didn't mention is that notion was challenged last year by the American Academy of Actuaries in a brief, "The 80% Pension Funding Standard Myth."

The academy said the origin of that standard has no clear origin and that "most plans should have the objective of accumulating assets equal to 100% of a relevant pension obligation."

Annual Review of Funding Levels and Risks as of June 30, 2012

April 16, 2013
CalPERS board OKs accounting changes hiking pension costs

RB_RT_Fire_2.JPGLeaders of the California Public Employees' Retirement System voted this afternoon to speed up payments on the fund's long-term liabilities with an accounting change that will trigger higher contributions of up to 50 percent from taxpayer-funded state and local governments and school districts over the next few years.

The matter will go to CalPERS' full Board of Administration on Wednesday, which will likely approve it.

The new policy will shrink the fund's asset "smoothing" period from the current 15 years to five years. Smoothing gains and losses avoids sharp spikes in the annual pension contribution rates that public employers pay with taxes and fees they collect. Critics said the 15-year period unwisely delayed a full accounting of the $100 billion CalPERS lost after the 2008 financial meltdown.

The accounting changes approved today also will amortize CalPERS' investment gains and losses over a fixed 30-year period. Fixing the amortization period obligates CalPERS to pay its obligations by a specific date. Currently, CalPERS resets the amortization period annually, essentially pushing its debts forward year after year.

The accounting changes won't hike what employees in pay toward their benefits because their contributions cover only "normal" costs, not the total $87 billion unfunded liability that their pension plans have racked up over the last several years.

it's left to employers -- and by extension, taxpayers -- to fill that gap with more money for CalPERS to invest. The policies that the board approved today will force public agencies to kick in more money for at least five years starting in 2015-16 to pay down those long-term debts.

For example, CalPERS estimates that pension contributions for state workers and school-district employees who aren't teachers will grow from about $5 billion to $7.5 billion over five years.

PHOTO CREDIT: Sacramento Metro Fire firefighters put out a grass fire near U.S. 50 and Folsom Boulevard in Folsom. Randall Benton / Sacramento Bee file, 2012

February 21, 2013
Brown aide defends pension reform for mass-transit workers

Thumbnail image for 130221 Morgenstern.JPGA top administration official has weighed in on a federal fight over the public pension law Gov. Jerry Brown signed last year law and whether it puts at risk billions of federal grant dollars.

In a letter last week, Brown's Labor Secretary Marty Morgenstern told the U.S. Department of Labor that the new pension law doesn't diminish mass-transit workers' collective bargaining rights, a prerequisite of the federal money.

"My legal staff and I have reviewed this matter carefully," Morgenstern wrote, concluding the law "merely modifies" the public pension plans that state and local government employers can offer.

The Public Employee Pension Reform Act caps benefits, hikes employee contributions and offers less generous formulas for employees hired Jan. 1 and later. Unions representing roughly 20,000 mass-transit workers in California contend the benefit terms that must be negotiated, not imposed.

February 14, 2013
From the notebook: Fighting heats up over pension reform law

notebook-thumb-216x184-9328.jpgWe can never get everything we learn into a news story. "From the notebook" posts give you some of the extra details behind the news.

Our story in today's Bee examines union lawsuits against a handful of pension fund boards in the so-called "1937 Act Counties" that aren't in the CalPERS system. It's difficult to draw any sweeping conclusions from the lawsuits because the details of each vary and the 20 counties with their own pension boards have different rules when counting pensionable income.

Labor unions aren't sitting still for trimming what types of compensation go into the pension calculations for members who were in the system before the Public Employees' Pension Reform Act kicked in on Jan. 1 (specifically Assembly Bill 197, which defines pension reform rules for employees in the funds before the law took effect.)

This week California Attorney General Kamala Harris, at the direction of Gov. Jerry Brown, filed this Notice of Intent to Intervene in litigation against Alameda County's pension system, and she'll likely file similar papers soon in Contra Costa, Marin and Merced county courts, spokeswoman Lynda Gledhill said, where unions sued those counties' pension boards for how they've interpreted the pension law.

To get a taste of the unions' arguments, check out this complaint against the Merced County Employees' Retirement Association:

January 18, 2013
January state retirement applications to CalPERS up 15 percent

The number of state workers entering retirement spiked in January, rising 15 percent over the same month one year ago, according to CalPERS.

The fund's monthly report shows that 2,264 state workers applied for their pensions, compared with 1,970 in January 2012. It was the biggest comparative January increase since 2010, when three-days-per-month furloughs and labor unrest contributed to a 31 percent spike in state retirement applications.

Total retirement applications to CalPERS, which include state and local governments and school district employees, rose 3 percent to 4,657.

The fund counts pension applications from mid-month to mid-month, so the January data includes the last half of December. Many state employees retire during that period because of how CalPERS' times initial cost-of-living-adjustments.

Here's a broader view of monthly state retirement figures dating to 2007, with more detailed spreadsheets at the bottom of the page:

January 15, 2013
Top 10 posts of 2012: Lawmakers reach public pension deal

Thumbnail image for countdown 1.JPGThis is the last in a series counting down this year's most-viewed State Worker blog posts, with a little hindsight analysis.

Events that seem momentous at the time often are partially or completely undone by subsequent events or simply time's passage. How many high school buddies fade into memory's mist? How many marriages end in divorce?

It's especially true in politics: A century of legal race discrimination followed the passage of the 13th Amendment. More recently in California, voters passed Proposition 8, which is then challenged in the courts and could be undone there or by another ballot initiative.

While not nearly as socially significant as slavery or same-sex marriage, public pension changes in California have a similar here-today-gone-tomorrow history. Over the last 25 years, the benefit has become a political football, with state and local officials of all stripes playing one side or the other, approving benefits, pulling them back, rewriting laws or undoing them as the politics of the moment dictate.

On Aug. 28, about an hour before Gov. Jerry Brown formally announced it, The Bee broke the news that he had reached an agreement with lawmakers on pension reform. The announcement ended -- for now, anyway -- a four-year public debate over public employee retirement benefits waged by Republicans, pension reformers, the non-partisan Legislative Analyst's Office and the Little Hoover Commission.

Now, just a few weeks into the latest pension-change law, there's controversy brewing over how it should be applied after CalPERS sent a list to employer members in December that views nearly 100 varieties of pay beyond base wages to be pensionable.

How will history view the deal first reported by The Bee in this post? A passing political fad or a permanent pension fixture?

Here's the most viewed State Worker item of 2012: Jerry Brown, Democrats reach deal on public pension overhaul.

January 14, 2013
Columnist, CalPERS lock horns over implementing pension law

Columnist, CalPERS lock horns over implementing pension law

Storified by Jon Ortiz· Mon, Jan 14 2013 08:42:39

Over the weekend, Bay Area News Group columnist Dan Borenstein went bonkers over a Dec. 27 CalPERS memo to employer members that delineates nearly 100 varieties of pay that the fund's staff concluded fall under the definition of "normal compensation" for purposes of calculating pensionable income. 

The definition matters because it's key to implementing the state and local pension reform measure that took effect on Jan. 1. Borenstein says including all those pay extras leaves the door open to pension spiking. 

CalPERS' three-day Board of Administration meeting in Monterey starts today and implementing the new law is on the three-day agenda.
Daniel Borenstein: CalPERS planning to gut a key cost-control provision of new pension lawBy administrative fiat, the California Public Employees' Retirement System has undermined a key anti-spiking provision of the new state p...
CalPERS response: It's a preliminary interpretation based on consultation with lawmakers who wrote and supported the legislation. CalPERS already has stiff anti-spiking rules in place and the new law's cap on pensionable income adds another layer.

Borenstein's "personal bias and crusade against public employee pensions once again got the best of him," the fund said in this letter to the editor and published on CalPERS' website.
Dan Borenstein's Crusade Against Public Pensions Gets the Best of Him and Misleads ReadersDan Borenstein is one of the few columnists that understands many of the complexities of public pensions but his personal bias and crusad...
Here's the list:
Here's the letter to employers:
Here's the board's agenda. The pension matter is set for discussion on Wednesday:

January 9, 2013
Top 10 posts of 2012: Jerry Brown's pension reform legislation

Thumbnail image for countdown 3.JPGThis is the latest in a series counting down this year's most-viewed State Worker blog posts, with a little hindsight analysis.

It's not often that a governor issues draft legislation and invites lawmakers and special interests to kick it around, but that's exactly what Gov. Jerry Brown did nearly a year ago by releasing state and local public pension reform language.

Pension reform crusaders said the plan was weak. Minority Republicans, who had little political leverage, eventually co-opted Brown's pension legislation as their own and then dared the Democratic governor and majority-party lawmakers to reject it. The political judo move didn't trip up the Democrats, who simply ignored the Republican's/Brown's bill.

The public pension measure that Brown signed in September included many of his original proposals, from putting an end to service credit purchases and "pension holidays" for employers and employees to pushing back the normal retirement age and requiring workers and their employers to split normal pension costs 50-50.

Brown's hybrid pension idea didn't gain traction, nor did any of the changes to the CalPERS board's composition that would have required changing the state constitution.

How will history regard Brown's push for pension reform? It probably depends on whether the new law sticks for at least a generation. That's how long it will take for state and local governments to fully realize its impact on their finances and their recruiting and retention.

For now it's safe to say this: Republican Gov. Arnold Schwarzenegger, for all of his public-pension rhetoric, didn't accomplish the changes that Brown signed into law last year.

Here's the State Worker's No. 3 post of 2012: Jerry Brown delivers pension reform language to legislators

January 3, 2013
Top 10 posts of 2012: Unions blast pension reform legislation

countdown 7.JPGThis is the latest in a series counting down this year's most-viewed State Worker blog posts, with a little hindsight analysis.

The press event called by several public labor organizations convened in an upstairs conference room across from the Capitol with a single goal: Make it clear that the unions were angry about a pension reform bill on the verge of becoming law.

December 29, 2012
Top 10 posts of 2012: Public pension ballot measure dies

countdown 9.JPG This is the latest in a series counting down this year's most-viewed State Worker blog posts, with a little hindsight analysis.

The latest push to end defined-benefit public pension plans officially died on Feb. 8 with the announcement that a ballot measure campaign to alter public retirement plans was suspended.

The announcement took pressure off lawmakers to quickly act on their own pension reform plan to counter California Pension Reform's measure. When the Legislature finally rolled out AB 340 at the end of the 2011-12 session, the bill put a six-figure cap on defined benefit pensions instead of ending them.

The February news also meant that unions a would be able to put everything they had into defeating Proposition 32, the campaign finance reform initiative that did make the Nov. 6 ballot, and supporting Brown's tax measure, Proposition 30.

Here's your pass to a stroll down memory lane with our 9th most-viewed post: California pension reform group suspends initiative campaign

December 27, 2012
Column Extra video: Roger Dickinson cautions prospective public employees

With just 400 to 450 words for our weekly State Worker column, much of what we learn each week never sees print. Column Extras give you some of the notes, the quotes and the observations that inform what's published.

This week's column springs from Assemblyman Roger Dickinson's hour-long visit with the Bee Capitol Bureau's reporters last week. During the discussion we asked the Sacramento Democrat what advice he would give to someone considering a career in state service.

We expected he would focus on the usual "P-words" that come up in government job discussions: "pensions" or "pay." Instead he surprised us with a different word: "privacy."

Here's a snippet of what Dickinson said:

December 12, 2012
CalPERS announces fax numbers for service credit applications

Thumbnail image for Thumbnail image for 100607 CALPERS HQ.JPGWith CalPERS' window soon closing on additional retirement service credit purchases, officials during this morning's board meeting noted that it has set up two fax lines to receive applications for the benefit.

Lawmakers approved a package of public pension changes last summer that include terminating the airtime purchase program on Jan. 1.. The benefit allows pension fund members with at least five years of service to pay both their pension costs and their employers' pension costs for up to an additional five years. The credit is then factored into employees' pensions when they retire.

CalPERS expects to receive a flood of airtime cost requests over the next several days, so do yourself a favor and follow these steps if you're considering a purchase, says fund spokeswoman Amy Norris:

Make sure you meet minimum eligibility requirements. Only active CalPERS members (that means currently working for a CalPERS employer) with five years of qualifying service time with a CalPERS employer member at the time of faxing or mailing the request can apply.

Visit the Additional Retirement Service Credit website. It has instructions about the process and an online cost-estimate tool. Use the tool, because you may quickly find out that the benefit is outside your price range and save yourself and CalPERS a lot of needless work doing paperwork for a benefit you'll end up rejecting.

If you're still interested after completing the cost estimate exercise, download and complete the service credit application found on the "Service Credit Estimate Results" page. It's under the paragraph entitled "IMPORTANT".

Then, either fax or mail the request to the CalPERS office.
The phone numbers to FAX costing requests are (916) 795-1224 and (916) 795-4019.

Don't fax and mail the form -- you'll only delay processing.

All requests must arrive at CalPERS and be date stamped in its mailroom by 5 p.m. PST, December 31.

PHOTO: CalPERS headquarters in Sacramento / Sacramento Bee file

December 11, 2012
Read the latest CalPERS - San Bernardino pension court filing

Thumbnail image for Thumbnail image for Thumbnail image for 100609 gavel.jpgFrom biz reporter Dale Kasler's story in today's Bee:

CalPERS must now confront a powerful group of foes in its multimillion-dollar fight with bankrupt San Bernardino: the city's bondholders.

A group of major bondholders filed a 114-page legal protest against CalPERS on Monday, saying the pension fund is trying to win preferential treatment in San Bernardino's case. CalPERS has been demanding the right to sue the city, which has fallen behind on $6.9 million in payments to the giant pension fund after filing for Chapter 9 bankruptcy protection in August.

The San Bernardino case and another municipal bankruptcy involving the City of Stockton are testing whether public pension protections or bankruptcy laws reign supreme.

If you haven't read it already, check out Dale's story then peruse the court filing he sent to The State Worker:

November 26, 2012
Richard Riordan drops L.A. measure targeting city pensions

Former Los Angeles Mayor Richard Riordan has dropped his push to put a measure to cut pension benefits for city employees on a spring ballot.

The Los Angeles Times reports that spokesman said in a statement that the mayor did not feel he could meet the late December deadline for collecting the voter signatures needed to qualify the measure.

The statement said Riordan would explore other options "to accomplish the goal of pension reform."

"I ask the mayor, the city council and union heads to work with me over the next several months to save the city from bankruptcy and drastic cuts to public services," Riordan said.

Click here to read the full Los Angeles Times report.

November 16, 2012
Fewer California state workers retiring in 2012 than in 2011

The number of California state workers who have appled for their first pension checks through the first 11 months of 2012 fell nearly 9 percent from the same period one year ago, according to new CalPERS statistics.

From January through the middle of November, 9,721 CalPERS members working for the state retired, compared to 10,671 during the same period last year. CalPERS counts initial pension applications from mid-month to mid-month, so the latest numbers include filings for the last half of October and the first half of November.

Meanwhile, the total number of state and local government retirement applications to CalPERS through November is off nearly 8 percent from 2011, despite significant monthly increases of between 24 percent and 75 percent over the last three months.

Although it looks like the 2012 will end with fewer state employees retiring than in 2011, the number of first-time pensioners since August is up 20 percent when compared with last year. If the monthly trend continues, look for a significant spike in the January retirement rolls, since more state workers retire at the end of December than at any other time.

Scroll over the the interactive chart above for state retirement comparisons. We've embedded a similar chart for all CalPERS retirements and spreadsheets with all the data after the jump.

October 25, 2012
California state worker retirements down slightly from last year

The number of state workers who who retired from service in October rose 16 percent from the same period in 2011, although year-to-date retirements are still slightly below last year's totals.

As the interactive chart below shows, 659 state employees applied for their state pensions last month, up from 566 one year ago. The departures contributed to the 8,830 state workers who have taken their pensions in 2012, down 2.1 percent from the first 10 months of last year.

In other words, if pension applications average 900 for the final two months of this year, 2012 will tie 2011 for the second-most number of state worker retirements on record.

Looking at the CalPERS retirements more broadly, a combined 25,712 state government, local government and schools members have taken their first pension checks from January through October, a 1 percent decline from the same period last year.

We've posted an interactive chart on the next page that captures the total membership retirement numbers.

The pension fund figures track service retirement applications submitted from mid-month to mid-month. The January numbers, for example, include employees who put in their papers in mid-December. This month's data account for retirement applications submitted from mid-September to mid-October.

The figures do not include disability retirements.

October 2, 2012
Arnold Schwarzenegger discusses public pensions on Jon Stewart show

121001Schwarzenegger book signing.jpgFormer California Gov. Arnold Schwarzenegger appeared on The Daily Show Monday to promote his autobiography, "Total Recall." The three-part unedited interview with host Jon Stewart touched on California's fiscal woes, with Stewart framing the subject as a political problem created by an initiative process that has allowed voters to refuse to raise taxes and simultaneously demand more government services.

Schwarzenegger pivoted from that point to public pensions, a topic that became a focus of his administration. The California Legislature created a system that now carries "$400 billion" in unfunded pension obligations, the Republican movie star said, money spent "looking backward" to pay benefits for work done that could be used for investing in the future on things such as education and infrastructure.

Stewart, a Democrat who generally sides with organized labor, offered little resistance to Schwarzenegger's pension claims, although the two later sparred over tax policy and the economy.

We've embedded the Daily Show segments below. Scroll to the 5-minute, 50-second mark of the first one to catch the pension discussion. The second clip includes Schwarzenegger explaining why he didn't feel beholden to the Republican Party. He crosses swords with Stewart over tax policy in the third segment, which opens with Stewart asking, "I'm wondering why you aren't a Democrat."

September 28, 2012
Majority of California voters say pension reform balanced or went too far

More than half of likely California voters think recent changes to public pensions strike a good balance or go too far, according to a new poll by the University of Southern California and the Los Angeles Times.

The poll mirrors a similar survey by the Field Poll and UC Berkeley's Institute of Governmental Studies released last week.

September 12, 2012
UPDATED: Jerry Brown signs California public pension reform bill

Gov. Jerry Brown this morning signed Assembly Bill 340, the pension reform measure that the lawmakers passed on the last day of the legislative session.

Read more from The Bee's Laurel Rosenhall by clicking here.

Updated at 1:16 p.m.: From AFSCME California spokesman Willie Pelote: "Today when Governor Brown signed AB 340 he made his disdain for a secure future for public employees crystal clear. AB 340 was flawed legislation that failed to take into account the massive concessions that public employees across California have made to balance budgets at the state and local level. As if there was any doubt the Governor's comments yesterday that pension changes didn't go far enough revealed that the Governor's real intent is to take public retirement funds and hand them over to the same Wall Street gamblers who drove our economy into a ditch."

Updated at 12;12 p.m.: SEIU Local 1000 President Yvonne Walker has released a statement about the pension legislation that reads, in part, "SEIU Local 1000 has always supported smart pension reform that ensures that as many workers as possible can afford a modest level of retirement security as they grow older. We believe that, in the long-run, the solution to the retirement crisis is to expand retirement security for all workers - public and private - not whittle away at the pensions of teachers, nurses, analysts, auditors and water quality personnel."

September 7, 2012
Column Extra: Internal memo cautioned economic slump would boost pension costs

120907 MARTY MORGENSTERN.JPGWith just 400 to 450 words for our weekly State Worker column, much of what we learn each week never sees print. Column Extras give you some of the notes, the quotes and the observations that inform what's published.

As we researched California's public pension history for our Thursday State Worker column, CalPERS' media relations office passed along a 1999 memo from then-Department of Personnel Administration Director Marty Morgenstern. The note to managers -- who would no doubt field questions from rank-and-file employees about why the state didn't just implement the increases -- explained why Morgenstern wanted to bargain them. He was particularly concerned about obligating the state pension system to life-time pension promises to employees based on fabulous-but-fickle CalPERS investment returns at the time:

You may be asked, "Why not the entire CalPERS package, isn't the Board paying for it?" The answer is no. CalPERS' earnings do help, but the State must still contribute millions of dollars each year to CalPERS to pay for our pensions. It is true that the State contribution has gone down of late. The biggest reasons ... low inflation, a good economy and the fact that CalPERS returns on investment have been greater than expected. Yet there is no guarantee that our economy will continue to grow at the same rate. More importantly, perhaps, we do not believe it is prudent to assume that CalPERS will continue to earn record-high investment returns. Like buying a home with a variable rate mortgage that has no cap, the risk would be too great.

The document embedded below includes Morgenstern's full memo and the Legislative Analyst's December 1999 take on the pension increases authorized in Senate Bill 400.


September 7, 2012
CalSTRS explains how pension reform affects members

The California State Teachers' Retirement System has published a succinct summary of the provisions in Assembly Bill 340, the pension reform measure on Gov. Jerry Brown's desk. The chart explains the details of the measure and members, whether current employees, retirees or workers hired on or after Jan. 1, 2013.

CalSTRS AB 340 Fact Sheet

September 6, 2012
Public pension reform: political posturing or profound pruning?

Tweet war: Political posturing or serious pension reform?

Here's an opening snippet of a debate that will run the next 60 days: Is the pension legislation California lawmakers sent to Gov. Jerry Brown truly serious pension reform or an inconsequential political ploy to pump up a November tax measure that Brown, Democrats and organized labor all support?

Storified by Jon Ortiz · Thu, Sep 06 2012 10:01:42

First, public-pension blogger Ed Mendel weighed in with his assessment: Assembly Bill 340 is significant.
Pension reform allows cities to bypass bargaining « Calpensions1 day ago ... Pension reform approved by the Legislature last week gives many cities new cost -cutting power that some have been unable ...
Steve Maviglio, organized labor's public-pension pitbull, then wrote about Mendel's item, arguing that editorials and columns dismissing the measure as a weak brew or calling for a "real" pension reform ballot initiative are wrong:
What the Pension "Reformers" Don't Tell You About11 hours ago ... Ed Mendel's widely-respected Calpensions.com takes a look at the new pension legislation today, noting that the ne...
And in this corner, Chris Reed, editorial writer for the San Diego U-T:
@stevenmaviglio What kabuki, Steve. First you pretend to loathe this reform. Now you're touting its hidden strengths. #MaviglioInAPretzelChris Reed
And awaaaay we go:
@chrisreed99 Re-read the piece. #Pension deal rips $40 billion+ more from public workers. I'm saying it goes too far, not that it's goodSteven Maviglio
@stevenmaviglio Steve Maviglio, I accuse you of Kabuki 101! It's not even grad level kabuki. Y'all think think it helps Prop 30. #FakeAngerChris Reed
Take $40b+ out of your hide and see how much #fakeanger there'd be. Black helicopters coming for you @chrisreed99Steven Maviglio

September 6, 2012
Column Extra: Pension fund critic Joe Nation compliments CalPERS

With just 400 to 450 words for our weekly State Worker column, much of what we learn each week never sees print. Column Extras give you some of the notes, the quotes and the observations that inform what's published.

Joe Nation.jpgToday's State Worker column notes a marked change in CalPERS' public posture in the last year or so, a shift that we attribute to a leadership turnover, humbling scandals and investment losses that have moved its the organization to press for more transparency, tougher ethical standards and changes to how the fund manages risk.

While CalPERS doesn't hesitate to defend itself when it perceives an unwarranted attack, it also has moved to give critics a voice. Our column cites one example: CalPERS decision to invite Stanford professor Joe Nation, an ardent critic of the fund's investment assumptions, to an August forum on public pensions. Here's video of that event. Note what Nation says at the beginning of the session about CalPERS "big tent" and an earlier experience with the fund:

September 1, 2012
Poll: What's your take on the pension bill sent to Jerry Brown?
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.

August 29, 2012
CalPERS: California public pension savings could reach $60 billion

California state and local governments stand to save between $40 billion and $60 billion over 30 years, according to a hasty fiscal analysis of a pension reform measure set for a vote later this week, according to CalPERS.

The fund's top actuary, Alan Milligan, announced the estimate with plenty of caveats during a special meeting of the fund's Board of Administration. Lawmakers didn't issue the 38 pages of language for Assembly Bill 340 until Tuesday evening. CalPERS staff worked overnight to analyze it in time for this afternoon's special

"We've had limited time in which to review the provisions," Milligan said, "so this estimate will change as we continue to delve in to the language of the bill."

August 29, 2012
Reaction pours in to public pension reform plan

A roundup of press statements about the new public pension reform proposal announced Tuesday by Gov. Jerry Brown:

Rob Feckner, president, CalPERS Board of Administration:

The Conference Committee's proposed legislation is the result of a thorough process involving multiple hearings across the state. We thank the Committee for its commitment to hear the views and ideas of all stakeholders and wish to recognize those that have contributed to the process.

According to news reports, many of the elements of the legislation announced today, including anti-spiking legislation, a strong definition of pay rate, and prohibitions against retroactive pension enhancements, will go a long way to ensure sustainability of the retirement fund, reduce abuse and add protections, ease administration, and reduce pension costs over time.

August 29, 2012
Read the California public pension reform bill

Here's the measure approved Tuesday night by majority Democrats on the Legislature's six-member conference committee on pension reform:

August 28, 2012
Unions blast California public pension reform plan

Labor unions wasted no time bashing the pension reform unveiled by Gov. Jerry Brown this morning as a unilaterally-imposed political exercise that needlessly guts state and local public employees' retirement for hundreds of thousands of workers.

"This is far more than 'low hanging fruit,'" said Dave Low, chairman of union coalition Californians for Retirement Security in statement issued while Brown was still holding a pension press conference in Los Angeles just before noon. "This is the fruit, the branch, the tree trunk, and the roots."

What particularly rankles labor leaders, however, was that none of this was bargained.

August 27, 2012
Steinberg: Lawmakers consider cap on pensions, not hybrid

120827 Steinberg kitagaki jr 2012.JPGLawmakers charged with overhauling California's state and local public pension law are considering a plan to cap defined benefit pensions that would not include a second 401(k)-style component common in so-called "hybrid" retirement plans.

"There will be a cap," Senate President Pro Tem Darrell Steinberg, D-Sacramento, during a hallway press conference this afternoon with Capitol reporters. "I think what you will see tomorrow, there won't be a hybrid. ... It will just be a cap, for both miscellaneous and public safety workers."

Steinberg wouldn't divulge details such as where the cap would be set, a key figure that will establish how many of California's 2 million-plus public-sector state and local workers fall under the provision. He also cautioned that his comments this afternoon shouldn't be construed as a formal announcement. As of this afternoon, lawmakers were still hammering out specifics and no pension language had been released.

"This is not a deal," Steinberg said, "I'm telling you I'm confident there will be."

August 27, 2012
California public pension reform legislation deadline looms

Thumbnail image for Thumbnail image for 110701 Steinberg Cap Bureau.JPGLawmakers have a deadline to send pension reform legislation to Gov. Jerry Brown by Friday. The buzz around the Capitol is that Democrats met through the weekend, but as of this morning it looks like specific terms are still being debated.

There's no bill language in place. The special committee charged with delivering legislation is primed to meet relatively quickly, but it probably won't convene until tomorrow to vote on a bill package.

Every source we've talked with this morning in the labor, legislative and pension reform arenas say that differences remain in some key areas: the scope of reforms (those impacting current employees versus those that would be applied to future hires only), whether some changes should be bargained (unions want everything bargained) and the annual salary ceiling for setting a defined benefit pension cap.

Leaders of both the Senate and Assembly have promised to deliver pension legislation before the Legislature's two-year session ends at midnight on Friday. Any bills waiting for approval after that will die.

PHOTO: Senate President Pro Tem Darrell Steinberg / Sacramento Bee 2011 file, Hector Amezcua

August 24, 2012
Column Extra: Judge says Stockton bankruptcy can break retiree health guarantees

With just 400 to 450 words for our weekly State Worker column, much of what we learn each week never sees print. Column Extras give you some of the notes, the quotes and the observations that inform what's published.

Writing is often as much about deciding what to leave out as it is what to put in. One of the items we decided to cut from Thursday's State Worker column was a reference to Association of Retired Employees of the City of Stockton v. City of Stockton. The case is significant because it signals the court's view of contract and pension law vs. bankruptcy law.

Association of Retired Employees of the City of Stockton v. City of Stockton

August 23, 2012
Column Extra: Expert discusses pension law versus bankruptcy law

With just 400 to 450 words for our weekly State Worker column, much of what we learn each week never sees print. Column Extras give you some of the notes, the quotes and the observations that inform what's published.

In reporting for today's column on the coming fight pitting pension law against bankruptcy law, we spent about 20 minutes on the phone with professor Douglas Baird at the University of Chicago's Law School, discussing what lies ahead for governments, bondholders and employees. Here are a few snippets of what Baird said:

On how municipal bankruptcies challenge a lender's ability to collect:
There are strong limits on what courts can do to affect day to day operations of a municipality in bankruptcy. When talking about municipalities, what does it mean if one of them refuses to pay?

If you lend me money and I don't pay you back.... You can go to the clerk of the court, seize my assets and get proceeds from the sale of those assets.

But if it's a municipality, what exactly to you do? Sure, you can sue and the court will say the municipality owes the money, but how are you going to get the money? Buildings, for example, don't belong to municipalities. They're considered public assets. They don't belong to the city. So your asset seizure options are limited.

On how bankruptcy law might open the door to altering pension contracts:
The question that hasn't been answered yet is to what extent can you change or modify those obligations through the magic of bankruptcy? Does bankruptcy law give you the power to change those? ...

Bankruptcy doesn't give you a pass to walk away from obligations. It's simply a device that allows everyone to have a come-to-Jesus meeting and recognize reality.

Let's say you have pension obligations of 100, and assets worth just 50. You've got to do something about that. ... As a general matter, if it's a pension obligation that's vested, it's extremely hard to touch. There's a difference between someone nearing retirement and someone ... who is just starting their career. ...

Let's not forget: If you make a promise to someone you're supposed to keep it. Bankruptcy law just allows you to ask, how can we make the best of a bad situation?

August 22, 2012
Republican Sen. Mimi Walters predicts pension legislation won't be 'comprehensive'


California Edition host Brad Pomerance recently opened his show with a 13-minute interview with state Sen. Mimi Walters discussing public employee pensions.

Walters is a member of the conference committee tasked with crafting pension legislation. State Senate and Assembly leaders have said they will come up with a bill before the current session closes at the end of this month.

Midway through the interview Pomerance asks, "Do you believe that we will see some form of pension reform in this legislative year?"

Walters: "I believe we will see a form of pension reform. Will it be comprehensive? No. Will it make major changes to the issues that we're facing wth pensions? No. I believe that this Legislature will do something to say, 'Hey we took care of a couple of the abuses and now let's hope this issue goes away.'"

Pomerance: "Is something better than nothing, or is nothing better? Because if you do something it won't address the real fundamental problem."

Walters: "My concern is if we just do a little something, it won't address the fundamental concerns that we're facing -- and the issue may very well go away."

A separate interview about voting rights and legislation starts at the 14-minute mark with Sen. Alex Padilla, D-Los Angeles.

August 14, 2012
Business group backs Jerry Brown's pension reform plan

Thumbnail image for Jerry Brown 2012 amezcua.jpgWith Democrats promising pension reform legislation by the end of this month, a statewide business group is pushing lawmakers to accept Gov. Jerry Brown's 12-point plan to change state and local retirement benefits.

In a letter to the governor and lawmakers on Monday, 15 members of the Regional Economic Association Leaders Coalition called the Brown plan "an important first step toward returning our pension obligations to a state of fiscal sustainability."

August 13, 2012
Study: Changing state and local pension benefits 'extremely difficult' but possible

Many states, including California, may have more legal wiggle room to alter retirement promises for current employees than commonly thought, according to a new survey of state and local pensions by the Center for Retirement Research at Boston College.

Researchers Alicia H. Munnell and Laura Quinby conclude that "the protection accorded pension benefits is less embedded in state constitutions and more open to interpretation than commonly perceived." If state courts and legislatures narrow "the current definition of the employer-employee contract to establish that the contract is created when the employee performs the service," then it would become possible to reduce retirement benefits for current workers prospectively, the authors conclude.

Munnell and Quinby say only three states - Alaska, Illnois and New York - have constitutions that clearly protect public pensions for current workers both retrospectively and prospectively. Arizona's constitution protects pensions "past and maybe future," while those in Hawaii, Louisiana and Mississippi protect only benefits that have been accrued.

California and most states consider pensions legal contracts protected from any laws that impair them. When the contract is considered to take effect is key. Conventional wisdom says that pension contracts in California and other states take effect from the first day of employment.

Munnell said in a recent interview with Pensions & Investments that she expects more states will attempt to redefine their pension obligations once courts rule on recent laws that did so in Rhode Island and New Jersey.

For the vast majority of states, however, changing future benefits for current employees is extremely difficult ...

In the end, however, the ability to modify pensions in these states hinges on when the contract is deemed to exist. States where the contract is found to exist at the time a worker is hired have little freedom to change benefits. States where the contract is found to exist at retirement have considerably more flexibility.

Each state would have to define that for itself, the authors conclude, through both the courts and their legislatures.

Pensions & Investments reports that Munnell thinks more states will move to alter pension benefits for current workers if the courts uphold changes to current employees' pensions enacted in New Jersey and Rhode Island.
Legal Constraints on Changes in State and Local Pensions

August 10, 2012
California state worker July retirements fall to four-year low

The number of California state workers who applied for retirement in July fell 21 percent when compared with the same month one year ago, the second-largest decline in the rate of first-time pensioners in 2012.

Some 848 employees took their pensions, marking the fewest to do so in July since 2008, according to new CalPERS figures.

For the first seven months of this year, 6,460 state workers submitted their applications to retire, down from 6,975 from January through July 2011.

The dropoff last month is particularly significant because, as the chart above shows, more state workers retire in July at the state's fiscal year-end than any other month except January. CalPERS retirement application data runs mid-month to mid-month.

The decline in the retirement rate runs counter to conventional wisdom that state retirements should be on the rise as more and more baby boomers exit. Several factors contribute to the trend. Among them is the lingering impact of the furloughs of two or three days a month from 2009 to 2011, which contributed to a spike in retirements.

High unemployment in California and an agreement between Gov. Jerry Brown and SEIU Local 1000 to cut retired annuitant jobs have squeezed retiree job options and probably persuaded some employees to stick around when they might have left otherwise.

Scroll over the interactive chart above for more details. If you want to dive in more deeply, click the link below to open spreadsheets that include CalPERS retiree data for state workers and for all fund members from 2007 through last month.

August 9, 2012
California's statewide public pension systems outperform other states

This just in on our sister blog, Capitol Alert:

California's state-managed public employee retirement systems appear to have outpaced those of other states in 2011 investment earnings, according to a new Census Bureau report.

Click here for more details and a link to the federal data.

August 1, 2012
Judge upholds San Diego pension reform

The voter-approved pension overhaul in San Diego, Proposition B, will move forward, reports the San Diego Union-Tribune. A Superior Court judge denied requests Tuesday to put the implementation on hold while a state agency decides if it is legal.

If implemented, Proposition B would replace pensions with 401(k)-style plans. These plans would be given to most new city hires. The measure also proposes a five-year freeze on pension pay for current workers.

The measure was overwhelmingly approved in June.

Read the full San Diego Union-Tribune story here.


July 26, 2012
Judge: Lawsuit against CalPERS over California prison receiver pension may proceed

Thumbnail image for kelso.jpegA judge has cleared the way for a lawsuit to proceed against CalPERS over an unusual work arrangement that allows California Prison Receiver J. Clark Kelso to continue accruing state pension benefits even though his position was established by a federal court and he answers to a federal judge.

As we have previously reported, Daniel E. Francis v. CalPERS contends that Kelso's employment agreement illegally washes his pay through the state Administrative Office of the Courts so that the money can be factored into his CalPERS pension. Kelso has said the arrangement, while unusual, was vetted, is above board and legal.

Francis, the plaintiff, is a retired state worker and therefore a CalPERS member. CalPERS had argued he had no standing to sue. Sacramento Superior Court Judge Michael P. Kenny ruled that Francis had the right to pursue the lawsuit as a taxpayer.

That decision means that the litigation can now focus on whether Kelso is a state worker on loan from the AOC to the federal court or a federal employee with an illegal pension-spiking arrangement. The receivership corporation reimburses the AOC for Kelso's pay and benefits. Ultimately, the state pays the receivership's costs.

Here's Kenny's ruling from last week:

July 10, 2012
Jerry Brown says California public pension reform won't be on November ballot

Thumbnail image for Thumbnail image for Thumbnail image for Thumbnail image for 080811 Jerry Brown.JPGGov. Jerry Brown has backed away from his earlier call for legislators to put a pension-change measure on the November ballot, although the administration is continuing to push for statutory changes.

In an email to The State Worker, Brown spokeswoman Elizabeth Ashford said, "There won't be pension changes on the November ballot. But we'll get the reforms done, you can count on that."

July 9, 2012
CalPERS state employees retirement rate slows in first half of 2012

The number of California state workers retiring for the first six months of 2012 is down from this time last year, according to CalPERS data.

Through the middle of June this year 5,612 CalPERS members had retired, compared to 5,903 during the same period last year.

In the last three months, the retirement rate has remained fairly consistent with the same period last year. The number of California state workers drawing pension checks in June was down just .86 percent from last year. In April the number was down 2.79 percent. In May it was up 5.47 percent.

This marks a large change from March, when 61.48 percent more people drew pension checks than did so in March 2011.

In January, 28.21 percent fewer people retired compared to the previous year. This marked a significant change to the total number of retirees for the year because this January only 1,970 state workers retired, opposed to 2,744 in 2011 and 2,647 in 2010. Most state workers choose to retire at the end of the year, which counts in the January retirement figures.

In February, however, 45.7 percent more retired than the previous year.

Click the tabs at the bottom of the above spreadsheet to see more charts and data about CalPERS retirement figures.

Hannah Madans contributed to this report.

July 3, 2012
Pension talks fall apart between Jerry Brown, CA Legislature

Gov. Jerry Brown's office says that the administration and Democrats in the California Legislature have failed to reach a deal on pension changes, David Siders is reporting over at our sister blog, Capitol Alert.

Read the story at this link.

June 7, 2012
Column Extra: What Jerry Brown said about pension reform

Thumbnail image for 080811 Jerry Brown.JPGWith just 400 to 450 words for our weekly State Worker column, most of what we learn each week never sees print. Column Extras give you some of the notes, the quotes and the observations that inform what's published.

Our column in today's Bee notes that Gov. Jerry Brown said Wednesday that pension reform is high on his agenda and that this week's public pension vote in San Jose is a wake-up call to lawmakers.

Hat tip to San Francisco Chronicle reporter @Carla Marinucci who tweeted video of her brief interview with Brown:

June 5, 2012
Poll: What will California voters decide about San Diego, San Jose pension reforms?

As voters head to the polls today, all eyes are on public pension measures on local ballots in San Diego and San Jose, the nation's eighth-largest and 10th-largest cities respectively. The measures both would put new hires into cheaper defined contribution retirement programs.

The San Jose proposal also would impact current employees by forcing them to choose between much higher out-of-pocket contributions to keep a defined benefit pension or switch to the cheaper defined contribution plan. The San Diego plan freezes employee pay used to calculate city pensions for six years, although the city council could override that provision with a two-thirds vote.

The measures have statewide and perhaps even national implications for the public pension reform movement as check on the electorate's mood on the issue.

Click here to read more about the San Jose's Measure B and click here for details about San Diego's Proposition B. Then take our poll:


May 31, 2012
CalPERS cuts pension benefits for Vernon officials

Editor's note, 6:11 a.m., June 1, 2012: An earlier version of this post incorrectly attributed the following memo to CalPERS. The summary is from a source outside of the fund, but CalPERS confirmed its accuracy.

CalPERS has whacked the pensions for several former City of Vernon officials in the wake of the scandal there and a subsequent audit that looked at city records from 2002 to 2010.

The decisions severely cut or completely eliminate benefits for most of the named CalPERS members.

Here's a memo detailing the fund's determinations followed by letters sent to each person earlier this month explaining the penalties and the rationale:

City of Vernon Membership and Compensation

Below is the information regarding the membership and compensation determinations for the City of Vernon employees. Based on the information we received, you will find that there were service credit periods removed for most of these members. In our letters addressed to the individuals below, we stated that determinations were given as a result of conflicting and insufficient information. The individuals and/or the City may provide additional documentation to supplement the information previously submitted. Any additional information must be submitted within 30 days of the date of the letter and must be specific and clearly show evidence that the members properly held the specific positions listed and that those positions were established and meet the requirements outlined by law, resolution or ordinance.

Eric Fresch (All service removed)
· Independent Contractor for service with the City of Vernon making him ineligible for membership for service with the City from 1986-2010
· 28.746 total years of service removed - of which 16.1 years was arrears service
· 5 years of Additional Retirement Service Credit removed - Reimbursement and/or credit to be effectuated in accordance with State and Federal law.
· Safety Classification denied
· If membership is proved CalPERS cannot determine payrate due to conflicting and lack of information.
· Pay schedules provided do not meet CalPERS requirements and contract agreements conflict with pay schedules provided.

Jeffrey Harrison (All service removed)
· Independent Contractor for service with the City of Vernon making him ineligible for membership for service with the City
· 4.676 total years of service removed
· Safety Classification denied
· If membership is proven CalPERS still cannot determine payrate due to conflicting and lack of information.
· Pay schedules provided do not meet CalPERS requirements and contract agreements conflict with pay schedules provided.

Eduardo Olivo
· Independent Contractor for service with the City of Vernon making him ineligible for membership for service with the City for 1994-2002
· 15.265 total years of service removed - of which 7.770 years was arrears service
· 5 years of Additional Retirement Service Credit removed - Reimbursement and/or credit to be effectuated in accordance with State and Federal law.
· If membership is proven CalPERS still cannot determine payrate due to conflicting and lack of information.
· Pay schedules provided do not meet CalPERS requirements and contract agreements conflict with pay schedules provided.

Roirdan Burnett
· Eligible membership date was changed to February 6, 2008 from December 3, 2002
· Part of his 4.462 years of service credit is determined to be as an Independent Contractor but still determining the period - If no documentation is provided, all service will be removed
· If membership is proven CalPERS still cannot determine payrate due to conflicting and lack of information.
· Pay schedules provided do not meet CalPERS requirements and contract agreements conflict with pay schedules provided.

Bruce Malkenhorst Jr. (Membership and Comp)
· Part of his 10.647 years of service credit is determined to be as an Independent Contractor but still determining the period - If no documentation is provided, all service will be removed
· Safety Classification denied
· Pending the verification of membership, payrates have been verified from 11/97-6/05 and 10/07-last day of employment
· If membership is proven the payrate cannot be determined from 7/05-9/07
· Member has requested a refund
· Member informed, upon correction of payroll elements by the City, CalPERS will contact member regarding a refund and/or credit of normal contributions. Reimbursement and/or credit to be effectuated in accordance with State and Federal law.

Bruce Malkenhorst Sr. (Comp Issue Only)
· The pre-deprevation letter, which includes our preliminary determination to adjust his allowance downward, was returned to program from LEGO on 5/21/12 for review. The letter will be mailed Friday 5/25/12, giving them until 6/25/12 to respond.
· He held multiple positions simultaneously, which were unable to be pulled apart to determine compensation related to each position
· His payrate did not comply with the requirements of being paid "pursuant to publicly available pay schedules" under the meaning of that phrase in the statutory and regulatory definitions for payrate. In addition, the amounts failed to meet other definitional requirements of payrate in so far as they were not for the normal duties of one full-time position and were amounts reported for duties or services performed for other simultaneous positions that would constitute "overtime" under the PERL.
· In an effort to determine a reportable payrate for the member CalPERS will be using $7,875 to calculate his allowance. This amount is the payrate for the position of the acting City Clerk, which is one of the position Mr. Malkenhorst held during the tenure of his employment. The $7,875 payrate was given to Mr. Malkenhorst's successor. It was provided in a Resolution signed June 29, 2005, and effective July 1, 2005. Mr. Malkenhorst's retirement date was July 1, 2005.
· His longevity has been determined to be limited to 20%, instead of the 25% his initial allowance was calculated with. This is due to the additional 5% only being available to him.
· The final compensation amount of $44,128 originally used to calculate his retirement allowance has been reduced to $9,450. This will reduce his allowance amount from $45,073.52 to $9,654.

Mark Whitworth (Comp Issue Only)
· The City is currently reporting a payrate based on his service rendered as the Fire Chief. This compensation includes a payrate of $16,599 and 5% ($829.95) Educational Incentive for a total reported compensation amount of $17,429.01.
· Mr. Whitworth is currently working in multiple positions and the City must substantiate the full-time payrate for each position and report the payrate(s) accordingly.
The pay must be for services rendered on a full-time basis during normal working hours and cannot be for additional duties or services related to other positions

Donal O'Callaghan
· Member refunded
· Notes have been added to the system in order to insure he cannot reinstate or redeposit without being reviewed and approved by the Compensation Committee.

Here are the cover letters and determination letters that CalPERS sent to each official:

May 31, 2012
Last-minute public pension bill enrages Illinois lawmaker

Illinois State Rep. Mike Bost, R-Murphysboro, blew a gasket on Tuesday after leaders in the Democrat-controlled General Assembly delivered new pension-reform legislation at the end of the session's last day. The video above captures Bost's blast, which included throwing the bill into the air, punching at the cascading papers and quoting Moses' words to Pharaoh: "Let my people go."

On Wednesday, Bost explained that the bill's last-minute introduction in the waning moments of the 2012 session set him off.

The Chicago Sun-Times reported that Republicans didn't like the bill "because of a gradual cost shift from the state to suburban and Downstate school systems, which for the first time would have to pay teacher and administrator pension costs instead of the state."

That would trigger either education cuts or tax hikes that suburban and Downstate Republicans can't tolerate.

House Speaker Mike Madigan dropped his proposal late Wednesday night.

Illinois unfunded state public pension obligations reportedly total $83 billion.

May 24, 2012
California state worker retirements down nearly 8 percent in 2012

The number of state workers drawing their first pension checks in the first four months of this year is down nearly 8 percent from a year ago, according to the latest data from CalPERS.

The four-month retirement rate continues a trend set in 2011, when initial retirements for the calendar year fell 8 percent.

Last month, the number inaugural state retirees fell to 627, down 2.8 percent from April 2011.

CalPERS counts new retirement data from mid-month to mid-month. Owing to the rules that govern cost-of-living adjustments, more state workers retire at the end of the year than at any other time. Those retirements show up in the January figures.

By contrast, far fewer state workers elect to retire in February, March and April. Relatively small shifts in retirement patterns during those months can produce big swings in the year-over-year percentages.

A total 1,711 state and local government and school employees with a CalPERS pension headed for the exits in last month, up 11 percent from a year earlier. Since January, 9,776 CalPERS members have retired, down 6 percent compared with the same four-month period in 2011.

Click tabs at the bottom of the spreadsheet below to toggle between tables with retirement data for state worker and for all CalPERS members.

May 22, 2012
CalPERS to host three retirement planning fairs this summer

CalPERS announced today that it will host retirement planning events in Sacramento, Anaheim and Santa Clara this summer.

Representatives from CalPERS, the Social Security Administration, the state's Savings Plus Program, ScholarShare college savings program and several employee and retiree organizations will be on hand. The events also include workshops on health and retirement benefits, service credit, Social Security and other pertinent topics.

CalPERS members can register via "My Education" area of the my|CalPERS member website at my.calpers.ca.gov.

120522 PiggyBANK.jpgHere are the dates, times and locations:

Sacramento
Aug. 10 - 11
9 a.m. - 4 p.m.
Sacramento Convention Center
1400 J Street
Sacramento, CA 95817

Anaheim
Aug. 17 - 18
9 a.m. - 4 p.m.
Sheraton Park Hotel
1855 South Harbor Blvd.
Anaheim, CA 92802

Santa Clara
Aug. 30 (one day only)
9 a.m. - 4 p.m.
Santa Clara Marriott
2700 Mission College Blvd.
Santa Clara, CA 95054

PHOTO: Big Stock Photo / Sacramento Bee file

May 8, 2012
SEIU Local 1000 president supports retirement for all

120508 Yvonne Walker 2008 brian baer.JPGRisky retirement plans aren't doing right by U.S. workers, SEIU Local 1000 President Yvonne Walker says in a CNN.com piece published today, and she thinks a California retirement-for-all bill is a "step in the right direction."

Walker's op-ed item refers to Senate Bill 1234, by Sen. Kevin de León, D-Los Angeles, which would establish a state-administered retirement fund for private-sector workers. The article, which you can read here, also mentions that New York is talking about a similar plan.

"Part of what we aspire to as Americans is being able to stop working with our dreams and reasonable expectations of retirement still intact," Walker writes.

SB 1234 is scheduled for a Senate Appropriations Committee hearing on May 14.

PHOTO: Yvonne Walker / Sacramento Bee 2008, Brian Baer

May 3, 2012
Darrell Steinberg says pension reform legislation still on track

Thumbnail image for steinberg.JPGSenate President Pro Tem Darrell Steinberg, D-Sacramento, said this week that public pension reform legislation is still on track for this year, although he wasn't sure about the timing.

"I've said all along it's our obligation to deliver comprehensive pension reform legislation this session," Steinberg said during a meeting with reporters in his office Thursday morning. "Whether it's before or after the budget, I don't know. It depends on conversations with the governor and the Assembly, as well."

Lawmakers have a constitutional deadline to deliver a balanced budget by June 15.

A conference committee focused on pension reform has been meeting since October. Assemblyman Cameron Smyth, R-Santa Clarita, who co-authored failed legislation that co-opted Gov. Jerry Brown's pension proposals, said last week that lawmakers generally agree on many points but that major sticking points include switching future workers to a hybrid plan and changing the retirement age for those future hires.

PHOTO: Darrell Steinberg / Sacramento Bee 2011 file, Hector Amezcua.

April 30, 2012
Public pensions assets rebounded in 2010

From Dan Walters at our sister blog, Capitol Alert:

California's state and local government pension funds saw a 12.4 percent increase in their assets during the 2010 fiscal year, according to a new Census Bureau report, markedly higher than the national pension fund increase.

Click here for the rest of Dan's post. A spreadsheet with some of the pension data is posted below:

April 26, 2012
Update: Pension issue alive despite bill derailment, Smyth says

Editor's note, 4:50 p.m.: This post has been updated with news about Senate pension legislation.

Despite a procedural move this morning to push aside two GOP pension reform bills, one of the suspended measures' co-authors says the issue is far from dead.

In a telephone interview after the Public Employees, Retirement and Social Security Committee hearing, Cameron Smyth, R-Santa Clarita, said that informal conversations with lawmakers lead him to believe that there's general agreement about many points of the plan that he and Assembly Republican Leader Connie Conway introduced in February.

"It seems like there are two sticking points: the hybrid plan and changing the retirement age," Smyth said.

As expected, the committee put a hold on several public pension bills this morning, including the two measures by Conway and Smyth that co-opted Democratic Gov. Jerry Brown's 12-point plan that would, among other things, fundamentally change benefits for future workers.

Public Employees Committee chairman Warren Furutani, D-Gardena, several days ago told lawmakers that pension reform bills would be put on hold, in deference to a special committee formed to consider the issue. Furutani co-chairs the Joint Legislative Conference Committee On Pension Reform, which started hearings last fall and is expected to propose legislation during this session.

Two mirroring measures in the Senate Public Employment and Retirement Committee, Senate Bill 1176 and Senate Constitutional Amendment 18, both authored by Senate Republican Leader Bob Huff, have not been voted on. The deadline for moving fiscal bills out of policy committees is Friday.

Senate President Pro Tem Darrell Steinberg said in February that the Republicans were "clever" to claim Brown's plan as their own, but the GOP measures were "cut-and-paste" bills without analyses. The Senate's ranking Democrat has said several times that he expects a pension reform package to pass this year.

When asked it he thought that would happen, Smyth said, "From the conversations I've had, everyone seems serious," but that Republicans would "remain engaged" and keep Democrats accountable.

Conway blasted Democrats on the Public Employees committee for sending Assembly Bill 2224 and Assembly Constitutional Amendment 22 (both by Conway and Smyth) to interim study, effectively killing them.

"It is appalling that Democrats would prefer to stick their heads in the sand rather than enact bipartisan reforms," Conway said in a press release.


April 26, 2012
California retirement savings bill advances in the Senate

120426 Steinberg and de Leon.JPGLegislation to create a state retirement account program for private sector workers in California cleared a Senate committee on Wednesday.

Senate Bill 1234, authored by Democratic Sen. Kevin de León, cleared the Senate Committee on Labor and Industrial Relations on a 4-1 vote. In favor: Sens. Ted Lieu, D-Torrence; Mark DeSaulnier, D-Concord; Mark Leno, D-San Francisco and Leland Yee, D-San Francisco.

Republican Sen. Mark Wyland, of Solana Beach, cast the lone no vote. Sens. Sharon Runner, R-Lancaster, and Alex Padilla, D-Los Angeles, didn't vote.

The measure creates a state-run "California Secure Choice Retirement Savings Trust" that would set up professionally-managed retirement savings accounts for private-sector workers.

Opponents -- insurers, a variety of trade industries and the California Chamber of Commerce, among others -- contend it establishes a needless new bureaucracy, creates uncertainty for employers and damages businesses that already sell retirement savings vehicles.

Critics have also charged that Democrats offered up the measure to counter pressure they've felt to change public employee pensions. Sen. President Pro Tem Darrell Steinberg rejected that notion and has said on numerous occasions that Democrats, who hold a legislative majority, will enact substantive pension reform legislation this year.

SB 1234 now goes to the Senate Appropriations Committee.

RELATED POST
California Democrats push pension plan for nongovernment workers

PHOTO: Senate President Pro Tem Darrell Steinberg, D-Sacramento (left), and Sen. Kevin de Léon, D-Los Angeles, walk to an event where they unveiled legislation on Feb. 23 to create a state-run retirement system for private sector workers in California. Rich Pedroncelli / Associated Press

April 20, 2012
California state worker retirements up for second straight month

The percentage of California state workers who filed to draw their first pension checks rose 61 percent in March compared with one year ago, according to new CalPERS' data, marking the second month in a row that more of them retired.

A total of 612 state workers retired in March. Still, the total number entering retirement in the first quarter of 2012 is down more than 8 percent compared with the first three months of 2011, owing to a big decline in January retirements this year.

CalPERS counts new retirement data from mid-month to mid-month. Owing to the rules that govern cost-of-living adjustments, more state workers retire at the end of the year than at any other time. Those retirements show up in the January figures.

By contrast, fewer state workers elect to retire in March than in any other month. February is the second-slowest month for inaugural pensioners. Relatively small shifts in retirement patterns during those months can produce big swings in the year-over-year percentages.

A total 1,704 state and local government and school employees with a CalPERS pension headed for the exits in March, up 41 percent from a year earlier. Since January, 8,605 CalPERS members have retired, down 9 percent compared with the same period in 2011.

Click tabs at the bottom of the spreadsheet above to see charts and more data about CalPERS systemwide retirements.

April 17, 2012
From the notebook: The CalPERS computer system report

We never get all of what we learn into a news story, but this blog can give users the data, the notes and the quotes from the notebook that informed what was published.

The CalPERS computer system story in today's Bee draws from an item on the agenda of the fund's Pension and Health Benefits Committee, which is meeting this morning.

Here's the report on the system. Click here to watch the committee session live online, starting at 9 a.m. or after the Finance and Administration Committee ends its hearing, whichever is later.
CalPERS Workload Inventory

April 11, 2012
California senators call for a vote on Jerry Brown's pension plan

California's ranking Senate Republican and one of the GOP's representatives on a special pension committee have fired off letters to Gov. Jerry Brown and their Democratic colleagues in the Legislature, calling for a key committee vote on the governor's pension reform plan later this week.

Republicans have embraced Brown's plan and put it word for word in two bills. Senate Republican Leader Bob Huff of Diamond Bar and Sen. Mimi Walters of Laguna Niguel on Tuesday signed the letters delivered to Brown and pension conference committee co-chairs Sen. Gloria Negrete McLeod, D-Chino, and Assemblyman Warren Furutani, D-Gardena, pushing for a vote Friday when the committee meets in Southern California.

They asked Brown to "join us to demand immediate legislative action on your twelve point pension plan, which we believe represents the first steps that must be enacted to get our runaway pension system under control."

Walters is a member of the committee, which has been meeting since last fall to come up with a pension reform plan. Majority Democrats on the panel have been lukewarm, at best, to key provisions of Brown's plan, and the governor hasn't said much about it since he issued the draft legislation which was co-opted by Republicans in February.

President Pro Tem Darrell Steinberg has said that the Legislature will pass a comprehensive pension-reform measure this year.

Click the link below to read the letters.

April 10, 2012
CalSTRS reaped big earnings but obligations still grew last year

The California State Teachers Retirement System said today that the gap between its promises to pensioners and its assets to pay them grew to $64.5 billion in fiscal 2011, up $8.5 billion from a year earlier.

The unfunded ratio grew from 29 percent to 31 percent despite the fund's investments turning a 22 percent profit for the year that ended on June 30, 2011.

CalSTRS Deputy CEO Ed Derman said during a conference call this morning that the fund would need to realize 10 percent returns for the next 30 years to climb out of the funding hole through investments alone.

Put another way, CalSTRS needs an annual infusion of money equal to about 13 percent of the annual wages earned by its 430,000 school-employee members. Actuaries said in a report due to the CalSTRS board on Thursday that losses carried over from the stock market collapse, a lowering of investment return assumptions and money allocated to a special benefits fund all contributed to the growth of the unfunded liability.

CalSTRS in February reported assets of $152 billion, sustaining its pension fund for 856,000 public school teachers and their families in California's 1,600 school districts, county offices of education and community college districts.

April 10, 2012
California Senate President Darrell Steinberg says public pension reform still on track

Thumbnail image for 110701 Steinberg Cap Bureau.JPGState lawmakers are still considering public pension changes, including a hybrid plan that would allow for a defined benefit component capped at a certain salary level.

Senate President Pro Tem Darrell Steinberg, D-Sacramento, revealed discussed the proposal to reporters on Monday afternoon, saying that plan is still in the formative stages.

Meanwhile the joint committee on pensions that has been meeting since late last year is scheduled to meet again on Friday in Southern California.

Gov. Jerry Brown has proposed a hybrid pension plan that mixes blends Social Security, a defined benefit and a more volatile 401(k)-style component that would aim to match 75 percent of an employee's three-year average income when they retire.

"We would prefer to take a different approach," Steinberg said, that would cap the defined benefit component to a percentage of salary, then supplement that with investment income.

"That makes more sense so that lower wage, middle wage workers are guaranteed a middle class pension," he said.

Like Brown, Steinberg linked pension legislation that cuts costs to gaining voter support for tax increases the governor and Democrats hope to put on the November ballot.

"I think there's an expectation that we'll pass pension reform this year and we intend to do so," Steinberg said. "And that is the right thing to do. And I think it also shows the people as we approach the November election that we're serious about the reform side of the agenda as well."

PHOTO: Darrell Steinberg during an interview at The Bee Capitol Bureau. / Hector Amezcua, Sacramento Bee, 2011

April 6, 2012
Pension and public employee bills set for hearing Monday

120406 State Capitol Building 1996 Sac Bee Rob Ferris.JPGThe Senate Public Employment & Retirement Committee is scheduled to hear several bills Monday, including three measures of interest to state employees:

SB 955 (Fran Pavley): Authorizes pension boards to give investment priority to in-state infrastructure projects over out-of-state infrastructure projects.

SB 1234 (Kevin de León): Establishes a guaranteed retirement savings system for private-sector workers. (Click here for a recent report on the measure.)

SB 1368 (Joel Anderson): Caps state employee pay at what the governor earns, currently about $174,000. (Click here for a recent State Worker column about the measure.)

The committee hearing is scheduled to start at 2 p.m. in the Capitol's Room 2040.

PHOTO CREDIT: California State Capitol / Sacramento Bee file, Rob Ferris

April 3, 2012
Are American state workers scourges or scapegoats?

Are state workers dragging down state budgets around the nation? Or have public employees and their compensation packages become convenient political scapegoats?

A year ago the PBS news show "Need to Know" took on what it calls "one of the most contentious arguments in the news today." We ran across the report this morning while surveying state worker news. Although the item ran on March 11, 2011, the topic remains relevant today.

Watch Union Salaries and State Budgets on PBS. See more from Need to Know.

March 28, 2012
Citrus Heights pension reformer sued for not contributing to retirement accounts

Marcia Fritz, the high-profile advocate for public employee reform, is being sued by two of her former employees for allegedly withholding money for their 401(k) accounts but failing to promptly make the contributions.

"There's absolutely nothing to it," Fritz said in a telephone conversation this afternoon. She said the action is "frivolous" and that she's planning to file her own counter lawsuit against plaintiffs Colleen and Tannith Mitchell.

The mother and daughter say that Fritz, a CPA and former head of Citrus Heights-based Marcia Fritz & Co., didn't make timely retirement savings contributions withheld from their pay checks, didn't pay them overtime and failed to provide meal and rest breaks.

Fritz said today that she has since sold her interest in the firm, although she's still available for consulting work.

Dave Low, chairman of union coalition Californians for Retirement Security, brought up the lawsuit during a pension policy face-off with Fritz at the Sacramento Press Club luncheon today. Low and Fritz have publicly sparred over the pension issue for the last few years.

Click the link below to read the court complaint.

March 13, 2012
Poll: CalPERS committee votes to lower investment assumption

From The Bee's Dale Kasler:

CalPERS today moved toward reducing its investment forecast by a quarter percentage point, a move that would cost the state's general fund $167 million a year.

Click here to read more.

The recommendation goes to a vote of the full board on Wednesday.


March 10, 2012
CalPERS 'air time' cost could jump soon for state workers

Next week, CalPERS Board of Administration will consider lowering its investment return expectations from the current 7.75 percent to 7.25 percent.

If that happens, pension costs would increase for state and local governments -- and employees would have to pay significantly more for air time after Mar. 15.

CalPERS Pension and Health Benefits Committee will take up the issue on Tuesday. If it accepts Chief Actuary Alan Milligan's recommendation, "The cost for service credit purchases under the present value method is expected to increase between 5 percent and 13 percent when looking at the most common ages at which members currently buy service. Note that the actual increase for some members would be more."

CalPERS members who buy air time before the deadline will get the benefit of the higher rate of return assumption. So will members with a request for an official air time cost estimate submitted to the fund before Friday.

Members have 60 days to purchase air time after receiving a price quote from CalPERS.

"No one (with cost esitimates in the queue) needs to worry," CalPERS spokesman Brad Pacheco told us Friday afternoon. "Those (prices) will be honored."

The benefit costs thousands of dollars. If you're thinking about buying air time, we recommend you start with CalPERS' online service credit calculator before contacting the fund for an official estimate. Click here for more details about how to get a quick ballpark idea of what air time would cost you.

We've embedded the return assumption rate item below. Scroll down to "Impact on Member Calculations," for the discussion of service credit costs.

March 6, 2012
Poll: California state worker retirements declined in 2011


Fewer state employees took their pensions last year, reversing a four-year trend that had seen more workers going into retirement.

And if the first two months of this year are any indication, more state employees will hang on to their jobs longer this year.

According to statistics provided by CalPERS in the chart above, 10,671 state workers applied for service retirement in 2011, down nearly 8 percent from the year before.

For January and February of this year, just 2,703 state employees submitted their retirement papers, a 17 percent decline from the same period in 2011.

The data shows the number of state applications for service retirements, which CalPERS counts from mid-month to mid-month. More state workers retire during the January period, which includes applications from mid-December to the end of the month, because of the way the fund calculates when they can receive their first retiree cost-of-living adjustment.

The number of state workers entering retirement had been growing each year, fueled by the state's aging workforce demographics. No doubt that furloughs, threats of wages being withheld during budget impasses, concessionary contracts and other issues during former GOP Gov. Arnold Schwarzenegger's administration pushed some employees to retire earlier than they might have otherwise.

(Click the tabs at the bottom of the table for charts and information about combined state and local retirement applications to CalPERS.)

Since there's no clearinghouse for exit interviews and no survey of why more state workers are sticking around, it's tough to say why fewer employees retired last year. What do you think?

February 23, 2012
Steinberg: GOP 'clever' to co-opt Jerry Brown's pension plan, but 'cut-and-paste' bills lack analysis

During his weekly chat with reporters this morning, Senate President Pro Tem Darrell Steinberg, D-Sacramento, talked about the Republicans co-opting Gov. Jerry Brown's 12-point pension reform plan. (For our analysis, check out today's State Worker column.)

Here are quotes and observations from this morning's get together gathered by The Bee's Senate beat reporter Torey Van Oot:

"I thought that was clever."

"I'm glad that they are entering the debate. It is important to point out that when we last voted on pension reform in 2010, the rollback of SB 400, 40 percent of the Senate Republicans did not vote for that pension reform in large part because it affected public safety," said Steinberg, displaying a printout of the vote.

"I'm glad that they're in the debate, and we are going to do exactly what I said we are going to do. We are going to finish the work of our conference committee. We are going to produce a conference report that addresses all of the governor's 12 points, and we're going to bring this to a conclusion here in a way that represents real reform and at the same time maintains the strength of affordable defined benefit plans."

Steinberg said while the governor's plan includes the right elements, Republicans haven't done much analysis on their "cut-and-paste work" to introduce the package drafted by the governor.

"I thought it was a very clever political move. I complimented Bob (Huff) on it."

February 23, 2012
Democrats want to extend guaranteed retirement savings to private sector

120223 de Leon 20110621 .JPGNew legislation unveiled this morning aims to build a sort of CalPERS-for-all retirement savings system that the measure's author says could cover an estimated 7 million working Californians in the private sector.

Senate Bill 1234 by Los Angeles Democratic Sen. Kevin de León would require businesses with five or more employees to enroll them in a new "Personal Pension" defined benefit program or offer an alternative employer-sponsored plan.

De León, Senate President Pro Tem Darrell Steinberg and other political and labor leaders who touted the measure noted that public discourse has focused on public employee pensions.

The press event came one day after Republicans co-opted Brown's 12-point pension plan and offered it up as their own legislation. When asked if the Democrats were offering the bill hoping to relieve pressure on them to curb public pensions, Steinberg said, "Absolutely not."

The majority party is "committed to public pension reform. We're going to be analytical about it. We're not running away from it," Steinberg said, calling the de León bill the private-sector "bookend" to public pension reform.

"I hear a lot about 'pension envy,'" said Democratic Assemblyman Warren Furutani, who is co-chairing a joint public pension committee. And while many critics of the current system, including Gov. Jerry Brown, have called for reforms, Furutani said he sees many of those efforts as a misguided attempt to spread the private sector's retirement insecurity in the name of fairness.

"This bill turns that argument on its head," Furutani said.

Still, de León said his bill isn't intended to provide government-level benefits for the private sector. "It's a supplement," he said. "It's not a panacea."

The personal pension system's investments would be professionally managed by CalPERS or another contracted organization, de León said. Employees would contribute about 3 percent of their pay through a payroll deduction. Employers would not be required to provide matching contributions.

The fund would be managed "very conservatively," de León said, with investments tied to US Treasury bond rates.

Treasuries, considered among the safest investment vehicles, offer roughly half the 7.75 percent rate of return that CalPERS assumes on its investments.

February 22, 2012
Republicans introduce Jerry Brown's pension reform plan

Democratic Gov. Jerry Brown's 12-point public pension reform plan has some new supporters: Republicans.

GOP lawmakers told reporters this morning that they are introducing Brown's reform plan as legislation, exactly as he wrote it.

"We haven't changed one comma, one period or one word," Senate Republican leader Bob Huff said during a Capitol press conference to announce the party's plan.

He called on Democrats to join his party to enact four measures that together would put the plan to voters as a state constitutional amendment and alter pension law for both state and local governments.

The Republican's move comes after Republican-backed California Pension Reform suspended its cash-starved campaign to put pension reform on the November ballot. One plan that the organization was considering would have closely mirrored Brown's, including the centerpiece idea to put future state and local workers into hybrid pension schemes that blend a smaller traditional guaranteed pension with a more volatile 401(k)-style component.

Lawmakers could have donated to the campaign. When asked if any of the legislators had been approached for contributions or supported the initiative campaign before its demise, Huff brushed the question aside.

February 21, 2012
Stanford: California's local public pensions $135.7 billion short

The 24 largest independent pension systems in California, including Sacramento County's, are facing a combined $135.7 billion in long-term obligations that they won't have the assets to cover, a new Stanford University report says.

Sacramento County is carrying $4.75 billion in unfunded liabilities, according to the report, with a funded ratio of 57.5 percent. Those numbers are based on an assumed rate of investment return of 5 percent used by the university's Institute for Economic Policy Research.

Generally, experts consider an 80 percent funding ratio for public pensions' financial health, but that figure is greatly affected by what the funds -- or in this case, Stanford researchers -- assume its investments will return. Many pension systems assume they'll earn 7.5 percent or more.

The average funded ratio of all 24 systems outside of CalPERS is 53.6 percent, using the lower Stanford investment return assumption. The research covers Alameda, Contra Costa, Fresno, Kern, Los Angeles, Orange, Sacramento, San Diego, San Francisco, San Joaquin, San Mateo, Santa Barbara, Sonoma, Stanislaus and Ventura counties. The cities whose pensions were examined include Fresno, Los Angeles, San Jose, and San Diego. The 24 systems account for more than 99 percent of independent system assets, Stanford says.

Between 1999 and 2010, the local municipalities' pension spending grew at 11.4 percent per year, more than the rate of growth for any other expenditure category, according to the report.

California Common Sense also sponsored the research by Stanford professor Joe Nation and student researcher Evan Storms. In December, Nation published a report that concluded California's three big statewide public pension systems have a combined $500 billion in unfunded liabilities. Public employee unions and CalPERS rejected Nation's conclusions.

MORE PENSION MATH: Funded Status, Benefits, and Spending Trends for California's Largest Independent Public...

February 21, 2012
Bill puts $250,000 limit on compensation to calculate CA pensions

Democratic Assemblyman Jerry Hill of San Mateo reintroduced a measure last week that caps the amount of state and local government employees' compensation used for pension calculations.

Assembly Bill 1639 would bring the state and local pensions in line with IRS rules that limit pensionable compensation. This year the limit is $250,000, up from $245,000 in 2011.

The law allows exemptions from the limit for public institutions. A few years ago the University of California's pension system was granted just such an exemption, although it wasn't implemented.

Then three dozen highly-paid UC employees demanded their pensions calculated on their full annual pay and not just the federal limit. That prompted Hill to introduce a measure similar to AB 1639 last year. The bill won unanimous approval in the Assembly.

Then Gov. Jerry Brown asked lawmakers to hold off on piecemeal public pension bills while he crafted a comprehensive reform package. Hill amended his measure to address some local pension issues in San Mateo County and struck the all-encompassing compensation-limit provision. Brown signed the more narrow measure.

Given its popularity last time around and it's restricted scope -- most public employees are nowhere near the compensation limit -- we expect Hill's new bill won't get much resistance. It might continue as a separate piece of legislation, although we think it could be absorbed into a larger pension reform package crafted by the Conference Committee on Public Employee Pensions in a month or so.

February 16, 2012
New analysis suggests public pension changes; reform spokesman looks ahead

Thumbnail image for Thumbnail image for 100831 calculator.JPGA new analysis of the public pension issue suggests that government should move from pensions that increase based on service time to plans that motivate performance with higher pay that then boosts retirement payouts.

"Solving the Public Pension Plan Dilemma," is written by Dan Van Bogaert, a adjunct professor who teaches human resource management courses at UCLA and Brandman University. His analysis appears in the latest volume of the Journal of Pension Benefits.

Bogaert makes several suggestions, from switching to 401(k)-style defined contribution plans and raising the retirement age for full benefits to mandatory pension funding ratios and restricting union bargaining to wages.

He also wants pension formulas that use a "replacement ratio" method that guarantees employees a certain percentage of their working pay when they retire, along with "pay-for-performance" compensation policies that would reward workers for work well done, not merely their years of service.

"The objective is to offer pay and incentivized rewards for performance, rather than offer entitlements connected to tenure. DB plan formulae based primarily on years of service would be de-emphasized, and replaced by incentives tied to pay, as a means to grow pension benefits," Bogaert writes.

(On a related note, Aaron McLear, who often spoke on behalf of California Pension Reform during its now-suspended campaign to qualify a state and local government pension initiative for the November ballot, last week answered the question, "What's next for pension reform?" Click this link to read his thoughts on CBS 13's website.)
Solving the Public Pension Plan Dilemma
IMAGE: www.photobucket.com

February 15, 2012
CalPERS: Jerry Brown's hybrid pension plan won't significantly cut state's costs

Thumbnail image for 100607 CALPERS HQ.JPGGov. Jerry Brown's proposal to put future state and local government employees into hybrid retirement plans won't significantly cut the state's pension costs and could cost some employers more than their current defined benefit plans, the California Public Employees' Retirement System said in an analysis released Tuesday afternoon.

"For school employers, cost savings are expected to be 2 percent of payroll, while local public agencies will vary but are expected to be greater than the State overall," CalPERS staff analysis concluded, while employers' cost for safety workers' pensions would increase.

The fund confirmed that the governor's plan would lower benefits for new workers and shift more risk from employers to employees. Brown and other pension reformers have argued that both need to happen.

The report, requested by the Conference Committee on Public Employee Pensions, didn't consider administrative costs to manage a hybrid plan or to possibly close current defined benefit plans. It used two hypothetical retiring employees to illustrate how a hybrid plan would work:

As directed by the Committee staff, the hypothetical member is someone hired at age 32 that will eventually retire at age 67 for miscellaneous members and hired at age 27 that retires at age 57 for safety members.

Brown's goal is for a hybrid system that combines retirement income streams aiming to total 75 percent of an employee's income averaged over his or her final three work years. For miscellaneous workers, Brown's proposal envisions 25 percent coming from a 401(k)-type savings account, 25 percent from a defined benefit and 25 percent from Social Security.

Safety workers who don't pay into Social Security would receive 50 percent from a defined benefit. Hybrid pensions for the California Peace Officer Fire Fighter group would cost the state 2.1 percent more, CalPERS concluded.

Some links for those who want to dive into the deep end of the public-pension debate pool:

The CalPERS hybrid cost analysis
Hybrid Actuarial Analysis 2. 2012.docx
Summary of Gov. Jerry Brown's 12-point pension reform plan
Bill language of Brown's 12-point pension reform plan

PHOTO: CalPERS headquarters. Sacramento Bee photo.

February 13, 2012
Bill puts $100,000 cap on future state and local pensions

120213 Don Wagner.JPGAssemblyman Donald Wagner (left) has introduced a bill that would cap state and local pensions.

The Irvine Republican's measure, AB 1633, would cap pensions for workers who don't participate in Social Security at $100,000 per year. Workers who do participate in the federal program couldn't receive more than $80,000 per year from a state or local pension.

The cap would apply to pensions of employees hired on or after Jan. 1, 2013. Conflicting labor contracts in effect on that date would control until they expire, then the state law would be binding and could not be undone by subsequent union agreements.

On a related side note, Bee Capitol Bureau colleague Torey Van Oot, who covered the Democratic Party Convention in San Diego last weekend tells The State Worker than Gov. Jerry Brown didn't mention the "p-word," pensions, in his speech at the confab. Brown has put a 12-point pension reform plan before lawmakers and last month asked them to "do something real" to bring down governments' employee retirement costs.

PHOTO: Assemblyman Donald Wagner / www.asm.ca.gov

February 9, 2012
San Jose pension estimates questioned

View more videos at: http://nbcbayarea.com.

Thanks to Blog User J for flagging this story for The State Worker.

February 8, 2012
California pension reform group suspends initiative campaign

A group that hoped to put a sweeping public employee pension reform measure on the November ballot is suspending its campaign.

"It's a sad day for pension reform in California," said Aaron McLear, spokesman for Sacramento-based California Pension Reform.

Although the group had drafted two measures that qualified for signature collection, it couldn't raise the $2 million or so needed to mount the petition effort for either one.

In November, Calfornia Pension Reform submitted a proposal to put future state and local public employees into defined contribution plans and another measure that would have shifted future workers into hybrid pensions. In January, it received the title and summary for both, intending to determine which would poll better and then shop that plan to potential campaign donors.

The language that came back from Attorney General Kamala Harris' office was worded to make it unpopular with voters, the pension reform group complained. The language was "false and misleading," it said in a press statement today.

And that made it harder to find money, McLear said.

February 3, 2012
UC study says hybrid pensions would hurt lowest-paid workers

111201 Brown Amezcua.JPGGov. Jerry Brown's plan to put future state and local government employees into hybrid pension plans and push back the full retirement age for new hires would hit low-paid workers the hardest, according to a recent academic analysis.

Researcher Nari Rhee of the pro-labor UC Berkeley Center for Labor Research and Education concludes that while Brown's suggested package of changes to public retirement systems contains "several sensible proposals," the pension design and age threshold changes "may impose a disproportionately large burden on low-wage workers."

February 2, 2012
Jerry Brown delivers pension reform language to legislators

Gov. Jerry Brown has sent language for his 12-point pension reform plan to the Legislature's Conference Committee on Public Employee Pensions.

The proposals are divided into two groups. The constitutional amendment Brown offered broadly outlines the pension changes more narrowly defined in the language to change state law. The governor's plan won't go forward without two-thirds of the Legislature voting to put the constitutional changes on the Nov. 6 ballot, which would then need voter approval from a majority.

The changes would kick in Jan. 1, 2013. Labor agreements that contradict the governor's plan would prevail until the pacts expire.

January 27, 2012
Does Jerry Brown's plan cut some pension contributions?

Blog User J, whose recent email follows, asked a question that we field every so often:

Jon:

You wrote: "All of the pension-change plans in play would alter guaranteed benefits for future employees and increase the out-of-pocket contribution costs for nearly all current workers."

I think the proposal by Brown would require current workers to pay "the equal share of the normal cost of the system." That is 14% which would require workers to pay 7%. We currently pay 8% and the buzz is that under Browns proposal we'd actually get a 1% decrease.

What do you show?

January 27, 2012
Darrell Steinberg: Pension reform must pass 'strength test'

110701 Steinberg Cap Bureau.JPGSenate President Pro Tem Darrell Steinberg said Thursday that the Legislature will consider some sort of pension reform bill this session, and he didn't rule out sending a hybrid plan for new hires to Gov. Jerry Brown for a signature.

The Sacramento Democrat talked at length about pensions during a morning meeting with the Capitol press corps on Thursday. The Bee's Torey Van Oot was there and passed this six-minute audio file from the event.

(Warning: To hear the file, you'll need software that plays m4a files, such as RealPlayer or QuickTime.) The recording is clear but low-volume, so turn up the sound on your listening device.)

A few highlights of Steinberg's responses to reporters' questions:

January 26, 2012
Read the agreement that 'unfires' Caltrans worker Duane Wiles, allows him to retire

From reporter Charles Piller's story in today's Bee:

Duane Wiles, recently fired by the California Department of Transportation for fabricating bridge tests, has been allowed to resign instead.

This marks the second time Wiles has been "unfired" by Caltrans. The first was in 1998 for incompetence, insubordination, dishonesty and other problems, but the agency was overruled by the State Personnel Board.

This week's settlement agreement with Caltrans prevents a public airing of Wiles' admitted fraud and errors, and removes a public forum for examining whether agency higher-ups responsibly addressed the problem.

Here's the stipulated settlement agreement signed by Wiles, his attorney and Caltrans representatives.
Duane Wiles Settlement Agreement with Caltrans

January 25, 2012
Pension committee hearing set for today

The Joint Legislative Conference Committee on Pension Reform is scheduled to convene today at 1 p.m. at the Capitol. It's the third in a series of hearings on public employee pensions that is intended to vet the issue ahead of legislation.

Today's hearing will focus on hybrid pensions. The centerpiece proposal of Gov. Jerry Brown's pension plan would move future state and local government employees into hybrid plans, which blend a smaller traditional pension with a more risky defined-contribution component that yields retiree payments based on the outcome of investments.

California Pension Reform has proposed putting a similar hybrid plan or a tougher defined-contribution-only measure on the November ballot. The Sacramento-based group is hoping to raise money to circulate petitions for the measure it believes has the best chance of passing, but it hasn't yet announced which one that is.

Hybrid plans are a non-starter with labor.

All of the pension-change plans in play would alter guaranteed benefits for future employees and increase the out-of-pocket contribution costs for nearly all current workers.

The committee meeting today includes Assemblymen Michael Allen, D-Santa Rosa, Warren Furutani, D-Gardena and Jim Silva, R-Huntington Beach. Senate members include Gloria Negrete McLeod, D-Chino, Joe Simitian, D-Palo Alto and Mimi Walters, R-Laguna Niguel.

Click here to watch the hearing live on the California Channel, which also archives recorded events for later viewing.

January 23, 2012
CalPERS investment returns down in 2011

From The Bee's Dale Kasler:

CalPERS said today it earned a 1.11 percent investment return on 2011, a fraction of the gains from the year before.

The results were announced at a board meeting in Monterey by CalPERS' chief investment officer, Joseph Dear.

Click here to read the rest of Dale's breaking news report.

January 18, 2012
What Republicans say about Jerry Brown's public pension plan

Republicans have briefly addressed Gov. Jerry Brown's call for public pension reform in a web video featuring Assembly Republican leader Connie Conway and Senate Republican leader Bob Huff. The GOP leadership crafted their remarks on Tuesday before Brown delivered his State of the State today. Here's the pertinent section of the GOP's "response":

Finally, every dollar we spend for pensions is a dollar we don't have to spend for our public schools and for local law enforcement.

So we will work across party lines to enact strong public pension reform.

Governor Brown has proposed a public employee pension reform plan that is actually a good starting point.

Republicans are ready to enact his pension changes.

But Legislative Democrats are stalling it because their special interest union allies don't like the reforms.

Check out what everyone is saying about Brown's speech on Capitol Alert. This link will open the full text of the Republicans' reaction to the State of the State. Here's the video:

Republican Response to Gov. Brown's State of the State from CA Assembly GOP on Vimeo.

January 18, 2012
One public pension initiative dies; more face looming deadlines

The herd of public pay and pension reform ballot measures is thinning out.

One pension fund reform measure is dead and several others will soon miss their petition deadlines.

Meanwhile, two plans backed by California Pension Reform are just a few days into the 150-day period to gather and submit signatures. The Sacramento-based group hasn't yet announced which measure it will promote. It has until mid-June to qualify a proposal for the November ballot.

We've called and left messages with the proponents of measures that are approaching their deadlines. If they call back with news, we'll report it here.

Here's a scorecard with links to measures facing deadlines this month or next:

January 18, 2012
Jerry Brown says public pension 'arithmetic doesn't add up'

Updated at 10:42 a.m. with Brown's extemporaneous remarks.

In this morning's State of the State address to the Legislature, Gov. Jerry Brown said a little about public pensions and his proposal to change them at the state and local level. Here's what he said, reading from his prepared text:

"As for pensions, I have put forth my 12-point proposal. Examine it. Improve it. But please take up the issue and do something real. I am committed to pension reform because I believe there is a real problem. Three times as many people are retiring as are entering the workforce. That arithmetic doesn't add up. In addition, benefits, contributions and the age of retirement all have to balance. I don't believe they do today."

Then Brown deviated from his prepared remarks with these comments:

"Starting tomorrow if you work for 30 years, are you going to live to 80, 90, 110? How much is that? How many people are retired? How many people are working? How many people are coming along? How does it all work out? Anybody who tells me that you feel absolutely confident that 40 or 50 years from now things are all going to be paid for are not looking at the numbers and the other comparable investments."

January 11, 2012
From the notebook: Pension reform backer explains rationale

notebook-thumb-216x184-9328.jpgWe never get all of what we learn into a news story, but this blog can give users the data, the notes and the quotes from the notebook that informed what was published.

Today's report on efforts to put a pension-change measure on the ballot notes that donations have started to come in and that the campaign is now entering a new phase to raise some quick cash.

Tench Coxe, a managing partner of Palo Alto-based Sutter Hill Ventures, is one of three Silicon Valley businessmen who contributed $25,000 to California Pension Reform at the end of last year.

He's also the only person to respond to a request for comment for today's pension initiative story in The Bee. We called and left a message for Coxe on Monday. He asked, through his assistant, that we email questions to him.

January 11, 2012
From the notebook: See the contributors to pension reform effort

notebook-thumb-216x184-9328.jpgWe never get all of what we learn into a news story, but this blog can give users the data, the notes and the quotes from the notebook that informed what was published.

Our report in today's fiber/cyber Bee notes that California Pension Reform received about $128,000 from donors even before it had an official ballot measure to show potential backers.

(Note: Californians for Retirement Security, which opposes CPR's efforts, told us that it wasn't obligated to report spending or contributions received fighting pension reform until now. Once the CPR measures received title and summary on Monday, the labor coalition or any other group fighting or supporting the proposals' qualification or passage must register and report.)

Here's the list of CPR contributors through Dec. 31 as reported by the campaign to the Secretary of State's office:

January 10, 2012
Governing magazine column blasts 'pension puffery'

Girard Miller, a frequent contributor to GOVERNING magazine and senior strategist at the PFM Group, has a few words for both sides of the pension debate in a recent column titled, "Pension Puffery: Here are 12 half-truths that deserve to be debunked in 2012."

Among the ideas that Miller takes on:

"The pension mess was caused by greedy people (from the other side), not us."
"There's no crisis. The stock market will recover and then there is no problem."
"The solution is to replace pensions with 401(k) plans, like the private sector."
"This is a $3 trillion problem when you measure it using honest (risk-free) math."
"The average public pension is $23,000."
The $100,000 pension club.

Click here to read Miller's column.

January 10, 2012
Pension measure backers say Kamala Harris wrote false statements

The group behind two ballot proposals that would significantly alter public employee pensions has blasted the summaries assigned to them on Monday by Attorney General Kamala Harris.

California Pension Reform said in a press release this morning that parts of the descriptions are accurate but that the first-term Democrat makes "other statements that are either provably false or grossly misleading."

Spokesman Aaron McLear said this morning that CPR will still press ahead with raising money and collecting signatures after it conducts some polling and decides which proposal has the best chance of success "within the next week or so."

Harris' spokeswoman Lynda Gledhill said this morning that "we believe the title and summary is accurate."

January 5, 2012
The State Worker's Top 10 of 2011: No. 1 -- Little Hoover pension reform report

countdown 1.JPGThis is the last installment in a series of posts looking back at the most-read State Worker blog items in 2011.

The debate over public employee pensions took an unexpected turn last February when the state's Little Hoover Commission suggested what had been the unthinkable: Change pension benefits promised to current state and local government employees.

A locally based research group, Californians for Fiscal Responsibility, had called for changing the guaranteed benefits promised to current employees. But now a government entity was suggesting the legally precarious and politically explosive idea.

The commission said that the public pension crisis is so severe that changing benefits for future workers won't fix it quickly enough. So the bipartisan panel said that state and local governments should freeze their defined-benefit pension promised to current employees and then prospectively place them into cheaper "hybrid" plans that blend smaller traditional pensions with more volatile 401(k)-type savings programs.

Both sides of the pension debate said that such a move would undoubtedly spark litigation. Conventional wisdom holds that pension promises are protected by both state and federal law, but the commission's report said that the principle should be directly tested in the courts.

Here's the link to the most-viewed State Worker blog post of 2011: "Commission's plan rolls back pensions for current workers," which ran on Feb. 24.

Postscript: The idea to alter pensions promised to current employees is dead for now. Two proposed ballot measures to alter pensions offered by another local group, California Pension Reform, and a plan promoted by Gov. Jerry Brown focus on lowering benefits for workers hired in the future.

January 4, 2012
The State Worker's Top 10 of 2011: No. 2 -- Jerry Brown's pension reform plan

countdown 2.JPGThis is the latest installment in a series of posts looking back at the most-read State Worker blog items of 2011.

Labor unions poured money and manpower into Democrat Jerry Brown's 2010 gubernatorial campaign, even while privately admitting concern over his notorious unpredictability.

Which Gov. Brown would they get? The one who, during his earlier turn in office, signed the law that allowed state workers to organize? Or would they get the Brown that cut 2,000 Caltrans engineers and vetoed raises for state workers?

They got a little of both.

December 30, 2011
The State Worker's Top 10 of 2011: No. 5 -- GOP pension plan

This is the latest installment in a series of posts looking back at the most-read State Worker blog items in 2011.

Republican lawmakers created some brief political thunder but no legislative rain last summer with Senate Constitutional Amendment 13, which would have let voters amend the state constitution's public pension provisions.

GOP Sens. Tom Berryhill of Oakdale, Anthony Cannella of Ceres, Bill Emmerson of Hemet and Tom Harman of Huntington Beach introduced the sweeping legislation in May despite the insurmountable political hurdle of getting majority Democrats' support.

Thumbnail image for countdown 5.JPGThe bill contained provisions found in pension change plans offered by Gov. Jerry Brown and California Pension Reform, including hybrid retirement plans for new hires, an equal split of employer/employee contributions and a ban on service credit purchases. State and local governments would have been impacted.

The measure didn't even get a committee hearing after its introduction, but it still received plenty of attention from State Worker blog users when we first reported it on June 1 under the headline, "Senate Republicans introduce sweeping pension initiative."

December 29, 2011
The State Worker's Top 10 of 2011: No. 6 -- Niello's pension plan

countdown 6.JPGThis is the latest installment in a series of posts looking back at the most-read State Worker blog items in 2011.

California's government pensions became political shorthand for both parties last year. Republicans used the issue to argue that government needs to cut back. Democrats defended public pensions as a last-stand for middle-class retirement security.

Throw in polls that show voters have some strong opinions about pensions and you can see why it's a tempting topic for politicians hoping to grab attention.

20110323_ha_budget5857 roger niello.JPGEnter former Republican Assemblyman Roger Niello, who filed a ballot proposal in March that would have raised the age factor for full retirement to 62 for public employees, capped pension payouts and increased the out-of-pocket contribution for many workers.

The plan opened Niello to charges that he was merely pressing a hot-button topic to fuel his political career.

Still, this Mar. 24 post, "Former lawmaker Niello proposes pension rollback initiative," created an immediate firestorm that lingered for months after Niello decided to shelve the plan. The State Worker still receives an occasional call or email asking whether the Niello plan has a shot at becoming law.

It doesn't.

Niello now supports California Pension Reform's efforts to cut pension costs with one of two initiatives it has submitted to the attorney general for titles and summaries.

PHOTO: Roger Niello / Hector Amezcua, Sacramento Bee file, 2010

December 28, 2011
The State Worker's Top 10 of 2011: No. 7 -- Pension plans unveiled

countdown 7.JPGThis is the latest installment in a series of posts looking back at the most-read State Worker blog items of 2011.

A group hoping to place a pension-change measure on the November 2012 ballot unveiled two plans last month, including one that mirrors a proposal by Gov. Jerry Brown to put new hires into "hybrid" retirement accounts that shift more investment risks to employees.

California Pension Reform, headed by former legislative staffer Dan Pellissier, is waiting for the official titles and summaries from the attorney general's office. The group expects those no later than Jan. 6, CPR spokesman Aaron McLear says. Then the organization will select the measure it thinks has the best chance of passing and, assuming it can raise the $2 million or so to gather signatures, start work on collecting signatures to qualify a plan for the ballot.

(Click here to read about the Legislative Analyst's take on the two measures.)

This Nov. 2 post introduced the plans' specifics and sparked nearly 400 comments: "California group moves to put pension overhaul on 2012 ballot."

December 27, 2011
Legislative Analyst releases review of California pension plans

Two public pension reform plans aimed for the November 2012 ballot wouldn't make much of a dent in government costs for decades, and the savings to employers' retirement expenses would be "offset to some extent by increases in other employee compensation costs," according to the nonpartisan Legislative Analyst's Office.

The LAO's take on both plans -- one a so-called "hybrid" system for new workers and the other a 401(k)-style retirement account for new workers -- concludes that they are fraught with legal peril and could wind up costing state and local government more or less depending on how they're "interpreted and administered."

The analyses share much of the same language and conclusions. Click here for the LAO's review of the defined contribution plan backed by California Pension Reform. This link opens the review of CPR's alternative hybrid pension proposal that mirrors a plan backed by Gov. Jerry Brown.

The LAO called Brown's plan "a bold, excellent starting point" for changing public pensions, but that it also "leaves many questions unanswered."

December 27, 2011
The State Worker's Top 10 of 2011: No. 8 -- The Stanford study

Thumbnail image for Thumbnail image for countdown 8.JPG

Putting "Stanford," "study" and "pensions" in a headline guarantees an online traffic surge. An April 2010 post, "Stanford study: Public pensions a half-trillion dollars short," ranked as the 15th most-viewed State Worker blog item among the 1,000 we posted that year.

This year's follow-up to that report by Stanford University professor Joe Nation ranked even higher -- and if the subsequent fallout from the report is an indication, rankled public-pension supporters even more.

Here's the Dec. 13 post on the latest Stanford study, "Stanford study pegs California pensions' shortfall at $500 billion."

December 14, 2011
Poll: What next for Jerry Brown's public pension plan?

Although Gov. Jerry Brown's public pension reform plan is still in the formative stages, it's become the reference point in the debate about government retirement. For example, the public pension study released by the Stanford Institute for Economic Policy Research specifically addresses the Brown plan. Pollsters have also surveyed public opinion on the governor's pension ideas.

So what do you think? What's next for Brown's pension plan?

December 13, 2011
Website compares pension obligations to general fund spending

California Common Sense has posted an adjunct "data transparency portal" supplementing this morning's Stanford study that estimates California's three biggest pension funds are carrying up to $485 billion in unfunded liabilities.

The CCS website allows users to parse the Stanford data by pension fund and by various metrics, including the one captured below that compares unfunded liabilities to general fund spending (excluding K-12 education and Health and Human Services).

This link opens the CCS website.

111213 CCS pension graphic.JPG

December 13, 2011
Read the new Stanford pension report

Stanford's Institute for Economic Policy Research has issued it's new report, "Pension Math: How California's Retirement Spending is Squeezing the State Budget." Click here for our previous post on the study.
Pension Math: How California's Retirement Spending is Squeezing the State Budget

December 12, 2011
Poll: Government workers favor lower pensions for new hires

Californians, both those in government and those outside of it, support changing public employee pensions, according to a new Public Policy Institute of California survey.

A little more than 8 in 10 of those surveyed said amount of money government is spending on public pensions is a problem, with 44 percent indicating it's a big problem and 39 percent saying it's somewhat of a problem.

The most stunning finding in the poll is the response to this question:

December 12, 2011
New public and private worker compensation figures released

111212 BLS chart.JPGThe U.S. Bureau of Labor Statistics last week reported that:

Employer costs for employee compensation averaged $30.11 per hour worked in September 2011. Wages and salaries averaged $20.91 per hour worked and accounted for 69.4 percent of these costs, while benefits averaged $9.21 and accounted for the remaining 30.6 percent. Total employer compensation costs for private industry workers averaged $28.24 per hour worked in September 2011.

State and local government employers spent an average of $40.76 per hour worked for employee compensation in September 2011. Wages and salaries averaged $26.57 per hour and 65.2 percent of compensation costs, while benefits averaged $14.19 per hour worked and accounted for the remaining 34.8 percent. Total compensation costs for management, professional, and related occupations, which represent approximately half of all state and local government employment, averaged $49.37 per hour worked. Average hourly compensation costs were $30.86 for service occupations and $28.49 for sales and office occupations.

Click here for more info from the BLS Thursday report.

December 8, 2011
Column extra: CalPERS assessment of Jerry Brown's plan

Thumbnail image for notebook-thumb-216x184-9328.jpgWith just 400 to 450 words for our weekly State Worker column, most of what we learn each week never sees print. Column Extras give you some of the notes, the quotes and the observations that inform what's published.

Our State Worker column this week looks at the recent hearing held by the Legislature's newly created Conference Committee on Public Employee Pensions. Here are some CalPERS references that were the source of numbers in the column.

Here's CalPERS' preliminary analysis of Brown's pension reform plan.

This link opens a fact sheet on CalPERS pension statistics and trends through fiscal 2010-11, including a table of employee pension contribution percentages.

December 2, 2011
More hearings ahead for California's public pension committee?

Thursday's hearing on Gov. Jerry Brown's pension proposal marked the second hearing held by the Legislature's newly created Conference Committee on Public Employee Pensions, and there may be more.

Assembly Speaker John A. Pérez and Senate President Pro Tem Darrell Steinberg announced the creation of the committee in September, saying the findings of its interim hearings would "fast forward consideration of the issue before the Legislature reconvenes in January."

But the tone of Thursday's hearing suggested the preliminary work of the committee, which was supposed to report back to the Legislature next month, could extend well into the new year.

"This cannot be a two-hearing answer," said Democratic Sen. Gloria Negrete-McLeod, co-chair of the panel.

A spokeswoman for Democratic Assemblyman Warren Furutani, also a co-chair, said the committee will probably end up holding at least four hearings in all "in order to get through all of the information."

Brown, who appeared before the panel to make the case for his plan, acknowledged that devising a solution could take time. The Democratic governor, who is still working out specifics of his own plan, suggested lawmakers act carefully but at a "deliberate speed."

"When we're dealing with a 40-year matter, you don't have to deal with it in 40 minutes, or 40 days or even 40 months," Brown said. "We have time here. ... I think we have a little time to work on it, realizing that each day we are off, we are digging our hole a little deeper."

December 1, 2011
Jerry Brown to attend legislative hearing on his pension plan

Brownpension2.JPGGov. Jerry Brown will be on hand this afternoon as a legislative panel convenes to review his pension proposal.

The Democratic governor will join Labor and Workforce Development Agency Secretary Marty Morgenstern and Department of Finance deputy director Michael Cohen as they present his plan to the Joint Conference Committee on Public Employee Pensions.

The 1 p.m. hearing marks the Legislature's first public vetting of the governor's proposal, which would raise the retirement age and scale back pension benefits for future workers.

Lawmakers will also hear testimony and analysis of the 12-point plan from the Legislative Analyst's Office, public employee pension systems CalPERS and CalSTRS, the University of California and representatives of public employee unions and employers.

This isn't the first time Brown has made a cameo at a public hearing on one of his proposals. Earlier this year, he appeared before a joint budget committee to make the case for extending temporary tax increases to help close the budget deficit. After months of negotiations, that proposal failed to win approval in the Legislature.

PHOTO CREDIT: Gov. Jerry Brown unveiled a 12-point public pension reform on Thursday, Oct. 27, 2011 that would ask voters to increase the age at which future state and local government employees could retire with full benefits and place them in riskier retirement plans than current workers. Hector Amezcua/Sacramento Bee.

November 29, 2011
Jerry Brown's pension plan to get California lawmakers' scrutiny

California lawmakers will delve into Gov. Jerry Brown's 12-point pension plan on Thursday, the second legislative hearing by a two-house committee looking at the state's pension systems.

Brown's plan would generally propose less generous benefits for new hires and raise the retirement age.

The committee, which held its initial hearing Oct. 26 in Carson, is chaired by Assemblyman Warren Furutani, D-Gardena, and Sen. Gloria Negrete McLeod, D-Chino.

Editor's Note: This post has been updated to indicate that Brown's proposal would raise, not lower, the retirement age. Updated at 1:51 p.m. Nov. 29, 2011.

Read the agenda:

Pension Agenda

November 17, 2011
Former Schwarzenegger adviser renews call for pension reform

Thumbnail image for 100126 David Crane 1.JPGDavid Crane, the jobs and economic growth adviser for former GOP Gov. Arnold Schwarzenegger and now president of Govern for California, says that pension changes need to be part of solving the multibillion-dollar state budget deficit expected next year.

Crane, whose group aims to help elect state legislators who demonstrate the "courage" to tackle major issues facing California, issued a statement in response to the Legislative Analyst's forecast Wednesday that the Golden State is headed for a nearly $13 billion shortfall going into fiscal year 2012-2013.

State workers remember Crane as a leading voice for changing the public pension system during Schwarzenegger's last term. He continues to write about pensions, although he's not directly involved in efforts by Gov. Jerry Brown or California Pension Reform to put reform measures on the November 2012 ballot.

Here's what the Democrat and successful global investor says lawmakers need to do:

• Renew the temporary tax increase adopted in February 2009;
• Enact the mandatory single sales factor corporate tax reform proposed by Governor Brown earlier this year but dedicate the revenues from that change to the general fund; and
• Enact the pension reform proposed by Governor Brown but modified to include proposals recently outlined by some pension reform groups to save more money in the short term.

Here's the full press release:

November 16, 2011
LAO: Retirement costs to increase by $200 million over 5 years

111116 Pension chart.JPGState pensions will cost government employers about $200 million more in fiscal 2016-17 than expected next year, according to a new report from the Legislative Analyst's Office. About half of those rising costs will hit the general fund.

The chart above comes from page 40 of the LAO report released this morning. It depicts California's general fund employee retirement expenses past, present and future.

Here's a slice of what the report says:

November 16, 2011
Labor coalition responds to California Pension Reform changes

maviglio.JPGSteve Maviglio, spokesman for Californians for Retirement Security, read this morning's report about tweaks to two pension reform ballot proposals and emailed a comment on behalf of the labor coalition:

"They can shop this measure to lawyers on the East Coast and try to get their funding from an Enron billionaire from Texas," Maviglio said in the email to The State Worker, "but at the end of the day, as the LAO has said, trying to slash the retirement benefits of California's public workers is unconstitutional, period."

What the Legislative Analyst's Office said was this:

November 16, 2011
Pension reform group files tweaks to California initiative proposals

Thumbnail image for 110815 Dan Pellissier.JPGCalifornia Pension Reform, the group pushing to put a public pension rollback measure on the November 2012 ballot, on Tuesday filed amendments with the attorney general intended to clarify their provisions.

The attorney general, which analyzes proposed ballot initiatives and then assigns them a title and summary, allows amendments to be made within 15 days of their submission. CPR first filed its proposals on Nov. 2.

In a statement released Tuesday afternoon, CPR President Dan Pellissier said that the changes were prompted by criticisms that some elements of the proposals might not be constitutional.

"As a result, we have contacted noted constitutional scholars across the country," Pellissier said. "They have made recommendations they believe will enable the courts to say this initiative is constitutional."