SACRAMENTO -- A pair of pension reform initiatives filed Wednesday could shake up the Capitol landscape and jolt reluctant Democrats and labor leaders into acting on Gov. Jerry Brown's plan to overhaul pensions.

Initially lukewarm if not hostile to Brown's plan, Democrats and public employee unions got a glimpse of the alternative -- measures that would require a lot more sacrifices from government workers than Brown's week-old proposal.

Led by two former officials in Gov. Arnold Schwarzenegger's administration, Californians for Pension Reform said it filed the two proposals with the attorney general's office but will decide in January which measure to circulate. The group will need 1.3 million signatures to qualify a measure for the November 2012 ballot, and officials said they're prepared to raise the approximately $3 million needed.

Brown's plan and the proposed initiatives come amid mounting public outrage over soaring pension costs that are gobbling up funds for basic services such as police and fire protection. In San Jose, where city leaders are seeking their own reform measures, rising retirement costs have helped drive a decade of budget deficits.

"If there's a more extreme measure out there, it could compel legislators and unions to come together on a consensus deal," said Ben Tulchin, a Democratic strategist. "I don't think a measure that's funded by wealthy right-wingers would pass in California. But if it's on the ballot, you never know. It's out there, so you've got to address it."


Brown has his own reasons for trying to get ahead of pension reform pushed by outside interests. The once and current governor recalls all too well the Legislature's botched 1978 effort at addressing property tax reform, handing anti-tax advocates the keys to victory in the historic Proposition 13 campaign. Brown had opposed the measure, but after it passed overwhelmingly, he announced he was a "born again" tax reformer.

Asked to comment, the governor's spokesman, Gil Duran, said that Brown "laid out the best and most realistic plan for achieving significant pension reform."

The initiative proposals differ in some key respects from Brown's. The governor called for eventually making public employees pay half the annual cost of their pensions. But the proposed initiatives open the door to billing workers with underfunded pension plans for at least some of the massive unfunded liabilities accumulated from market losses, retroactive benefit increases and flawed cost assumptions.

A state watchdog commission earlier this year reported that 10 of the state's largest pension funds have a combined $240 billion in unfunded pension debt, or more than $20,000 for each California household.
The initiatives also include provisions against pension "spiking" for current employees and limiting government contributions to underfunded plans. Spiking is a practice in which workers artificially inflate their compensation at the end of their careers to beef up their pensions. One version would put new hires on a 401(k)-type defined contribution plan similar to those in the private sector.

But backers of the initiatives will have to prove they can fund it before the Legislature takes them seriously, said Rob Stutzman, a Republican strategist who worked with former GOP legislator Roger Niello on a similar measure earlier this year but backed down when they couldn't attract funders.

"It's a tough issue to raise money for," Stutzman said. "We certainly couldn't find those champions willing to commit. It's not just a couple million you need for signatures; you're looking at $10 million to $15 million, minimum, to run a campaign at a time when there's a lot of competition for money. It would almost take an ideological funder.

"But no question, if they can get the signatures they'll have leverage and influence over any legislative activity," Stutzman added.

Shortly after plans for the initiatives were announced, Brown's office released a long list of editorials and columns supportive of his plans -- which would make current and future public employees pay at least half the annual cost of their retirement benefits and would put future hires on a "hybrid" plan that combines a modest traditional pension with higher retirement ages and a 401(k)-style tax-deferred retirement savings account. It also raises the retirement age for new workers to 67 for those not in public safety.

Even the backers of the initiatives were impressed with the sweep of the governor's plan. But, they said, it doesn't go far enough, and they doubt the Democratic-controlled Legislature's willingness to adopt the governor's proposals.

"While we would prefer to see a legislative solution to this problem, we know full well that there is little chance of that happening," said Mike Genest, a former state finance director for Schwarzenegger working with the reform group. "We cannot afford to postpone decisive reform while our elected leaders debate half measures."

Public employee groups blasted the group's proposal as a conservative effort to smear government workers and asserted it is illegal. But they seemed more receptive to the governor's proposals than they had been last week. "We will continue to work with the governor and legislature to craft changes in the state's complex pension system rather than have extremist politically motivated ballot box measures like this one," said Dave Low, chairman of Californians for Retirement Security, which represents 1.5 million public employees and retirees.

The Legislature began a joint conference committee on pension reform last month and will hold at least one more hearing to address Brown's proposal, as well as the initiatives, said Alicia Trost, spokeswoman for Senate President Pro Tem Darrell Steinberg, D-Sacramento.


  • For current employees, the initiatives would cap government contributions to underfunded pension plans at 6 percent of pay for most employees and 9 percent for public safety workers. Employees with underfunded pension plans may be asked to pay some unfunded liabilities.

  • The initiatives would prohibit pension "spiking," a practice in which workers artificially inflate their compensation at the end of their careers.

  • For new employees, one initiative proposal would cap government retirement contributions at 6 percent for most workers and 9 percent for public safety, limiting them to perhaps a 401(k)-type benefit or annuity.

  • The other initiative proposal would provide a "hybrid" benefit similar to the governor's proposal, combining a traditional pension with a 401(k)-type benefit. But it would cap annual pension payments at $100,000.