Monday, August 15, 2011

Associated Press: State pension reform top priority for CA lawmakers

California pension reform top priority for returning lawmakers

By Adam Weintraub
Associated Press

SACRAMENTO -- Five months after Gov. Jerry Brown released a 12-point plan to reform public pensions, there has been a lot of talk but little action on the issue at the Capitol.

That could change this week when lawmakers return from their summer recess. Legislative leaders are considering several ways to address pension abuses and long-term financial health in the systems that pay for government worker retirement benefits. Among them:

  • Limiting some abuses that anger the public and increase costs, such as pension spiking, which artificially inflates retirement benefits by boosting pay at the end of an employee's career.

  • Creating a broader package of pension reforms for this year to fix abuses and address longer-term financial concerns, possibly including limits on state contributions or a hybrid system that combines elements of traditional pensions and investment accounts that do not guarantee benefits.

  • Tackling a broad pension package next year or in a special session, with a full series of legislative hearings.

  • The Democratic governor is saying little about his plan or how it might line up with what legislators have in mind. Members of his staff have met in recent weeks with lawmakers, public employee union representatives and pension-reform advocates.

    A spokesman for the governor's office said Friday that Brown is still "fine tuning" the framework developed during budget negotiations with Republican lawmakers this spring. Those talks broke down without a deal, but Brown said in March that he intended to push ahead without Republican backing, even on tough pension changes such as capping benefits and changing how teacher pensions are financed.

    "When those negotiations collapsed, the governor made it clear that pension reform would remain a priority," said spokesman Evan Westrup.

    Legislative staffers and union representatives who were familiar with talks on the issue said Brown's stance will be important, but that some Democratic legislators want to move forward with or without him.

    Aides said Senate President Pro Tem Darrell Steinberg, D-Sacramento, and Assembly Speaker John Perez, D-Los Angeles, were scheduled to talk about the agenda during the Legislature's final month, including pension strategy. Neither would comment Friday.

    "The speaker's office considers pension reform a serious issue, and it's a priority (Perez) intends to work on with other legislators," said Robin Swanson, spokeswoman for the speaker's office.

    Public pensions have become a political issue across the nation as the economic downturn has squeezed state and local government budgets. The latest wave of criticism arose last week after another big drop in the stock market that wiped billions of dollars temporarily from pension fund assets.

    Some of the arguments focus on whether the plans that guarantee benefits to government retirees are financially sustainable. Brown's May budget proposal estimated that California owes $181 billion more for retiree pensions and health care than it can pay. Critics say the number is even higher.

    Pension officials note their long-term record of hitting or exceeding financial projections and warn against short-term decisions that will affect workers for decades into the future.

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