On Tuesday, Gov. Jerry Brown (D) and Democratic lawmakers announced that they have reached a deal on pension reform for public employees, the Orange County Register reports.
The legislative Conference Committee on Pension Reform approved the legislation (AB 340) Tuesday evening.
Details of Pension Plan
The bill would:
- Require all current and future public workers at every level of government to pay at least 50% of their pension costs;
- Increase the retirement age by at least two years for future public workers (Joseph, Orange County Register, 8/28); and
- Cap the amount of future public workers' salaries that can go toward their pensions at $110,000 for those participating in Social Security and $130,000 for those not participating in the program (Ortiz, Sacramento Bee, 8/29).
The bill would apply to most public workers. However, it would not affect employees of the University of California system or of charter cities with independent pension systems.
Altogether, the bill includes 10 of the 12 points included in Brown's original pension reform plan (Orange County Register, 8/28).
The bill does not include the centerpiece of Brown's original plan, which was a requirement that new workers have a significant portion of their retirement money placed in 401(k)-style accounts. The requirement would have shifted more financial risk from the state to workers (York/McGreevy, Los Angeles Times, 8/29).
In a statement, Brown said, "These reforms make fundamental changes that rein in costs and help to ensure that our public retirement system is sustainable for the long term."
He added, "These reforms require sacrifice from public employees and represent a significant step forward."
Reaction to Bill
Assembly member Jose Solorio (D-Santa Ana) said that preliminary figures suggest that the bill "will save the state tens of billions of dollars over the next 30 years."
He said that he plans to vote in favor of the bill because it "seems fiscally sound and fair to taxpayers, employees and retirees" (Orange County Register, 8/28).
Jim Wunderman, president and CEO of the Bay Area Council, said that the bill "represents a big step forward" and that "more work lies ahead" (Sacramento Business Times, 8/28).
According to the Register, the bill was criticized by union leaders who said it goes too far and by Republican lawmakers who said it does not go far enough.
Dave Low, head of the union coalition Californians for Retirement Security, said, "We are outraged that a Democratic governor and Democratic Legislature are taking a wrecking ball to retirement security for teachers, firefighters, school employees and police officers." He said, "While we support common-sense changes to end spiking and abuse of the system, this package is unfair and wrong" (Orange County Register, 8/28).
Meanwhile, Assembly member Don Wagner (R-Irvine) said labor unions "doth protest too much" because they actually fare better under the bill than if some of Brown's original proposals were included.
Assembly member Connie Conway (R-Tulare) in a statement said, "It appears that Gov. Brown is taking a step backwards in supporting a Democrat plan that is much weaker than the plan he himself has proposed -- and which was strongly supported by Republicans" (Los Angeles Times, 8/29).
The Register notes that lawmakers do not have much time to approve the bill.
The Legislature is required to adjourn for the year at midnight Friday, and legislative rules state that lawmakers must wait at least 48 hours to vote on a proposal after it is approved by the Conference Committee on Pension Reform.
This gives lawmakers about one day to pass the bill before adjourning (Orange County Register, 8/28).