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Pension reform will free up dollars for schools

POSTED November 29, 2011 8:20 p.m.

 

Recently, Governor Jerry Brown unveiled his state worker pension reform proposal to the public. He presented a plan that, at least on paper, is a good start, ending the worst abuses in the system and requiring future employees to more equitably share in the cost of retirement benefits.

It is a good sign that many of the ideas the Governor put forward are ideas that Republicans have pushed for years. Pension costs are consuming a larger chunk of the state budget each year, threatening classroom funding.

According to the bipartisan Little Hoover Commission, the 10 largest public pension funds in California – including CalPERS – faced a combined shortfall of more than $240 billion in 2010. Researchers at Stanford University have come up with an even more shocking number – they estimate unfunded pension obligations to be as high as $500 billion.

The nonpartisan Stanford Institute for Economic Policy Research estimates that the unfunded burden of CalPERS, CalSTRS & UC retirement system combined could be as high as $500 billion to taxpayers.  What this means is that without reform, the state will have to take money away from our schools to pay for increasing pension costs.  Every dollar we spend on pensions is a dollar we don’t have to fund our classrooms and the education of our youth.

At the local level, city and county governments are struggling with severe pension deficits of their own.  When I served on the Modesto City Council, we were confronted with the dilemma of funding the pension benefits that were promised to retirees while trying to stave off even deeper cuts to current workers and existing services.

Since pensions promised to current retirees were legally locked in, we could only make marginal reforms. The city is now working with unions to increase the retirement age and change the pension formulas for newly-hired employees, which is similar to the Governor’s plan.

I am encouraged that the Governor recognizes that making public pensions more sustainable in the long-run is necessary to help fully fund the priorities that we all care about. Implementing reforms now – such as eliminating retroactive pension increases and requiring employees to work 25 years before they receive full retiree health benefits – are needed steps to help balance the books going forward.

The Governor’s plan is more about the long term.  We must also enact reforms to bring immediate savings, such as requiring higher out-of-pocket contributions for pensions and retiree health care, changing the method by which retirement benefits are calculated and ending the purchase of service credits for years not actually worked.  Though this may require bargaining, I believe that our hard-working public employees will partner with us in the best interests of all Californians.

While I am cautiously optimistic about the Governor’s proposal, I want to ensure that the actual legislation he submits to the Legislature tracks with his rhetoric. In addition, voters should be given the opportunity to lock in any reforms because that will offer the strongest protection against future politicians undoing them.  Just this month, voters from Redding to liberal San Francisco passed pension reform measures, and I believe they will do so statewide if given the opportunity.

For the sake of our children’s and grandchildren's future, and protecting them from the debt that has been put upon them, the Legislature must pass meaningful pension reform. I am committed to doing whatever I can to help make that happen.

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