In seeking to test the vested rights of current employees, San Jose Mayor Chuck Reed has taken a risky but necessary first step on pension reform.
Government leaders across California should take heed.
Reed is an Air Force veteran, a Stanford-educated attorney and moderate Democrat who was elected to his second and final term a year ago with 77 percent of the vote. Last month, he declared a fiscal state of emergency in his South Bay city of 1 million people.
He blames soaring pension and retiree health costs for the city's large deficits. Retiree health and pension costs jumped from $155 million to $250 million in a single year and, if nothing is done, could grow to $650 million in five years. At that point, Reed predicts, San Jose would be reduced to an all-volunteer fire department and a mostly volunteer police department.
Reed wants to put a measure on the November ballot that would cut pension benefits for current workers. Under the proposal people working for the city now would keep the value of the pensions they've earned to date, but accrue any additional benefits at a reduced rate.
The mayor also wants to raise the retirement ages for most workers to 65, and to 60 for police and firefighters.
Similar to the bombshell recommendation in the Little Hoover Commission's controversial pension report released in February, Reed's ballot proposal would test the vested rights of current workers.
Like Reed, the commission concluded that reducing pension benefits for future hires, or even increasing the retirement contributions of current workers, does not produce enough savings soon enough to avert truly draconian cuts in public budgets. The state, cities, counties, schools and special districts facing crushing pension burdens need relief now.
Public employee union leaders and officials representing the state's big pension funds have been quick to dismiss the idea of reducing pension benefits for current workers as unconstitutional. But Reed isn't alone in wanting to test that assumption.
The League of California Cities has commissioned a legal opinion on the subject. In an email to member cities, the league announced recently that it has asked legal counsel to analyze the constitutionality of legislation "that would allow public agencies to reduce the retirement benefits of existing employees."
Proposals to reduce current workers' benefits are often framed as anti-union. They are not. Workers most at risk from out-of-control pension costs are young union employees. Young park maintenance workers, librarians, social workers, teachers, janitors, trash collectors, police officers and firefighters are being laid off across California so that their more senior colleagues can collect pensions far richer than state and local governments can afford.
All citizens, but those young public employee workers in particular, ought to welcome San Jose Mayor Reed's initiative.
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