The cause of pension reform in California took a significant body shot Wednesday when a group hoping to put an overhaul measure before voters this year suspended its campaign.
Beleaguered by fundraising problems and questions about the viability of its proposals, California Pension Reform shut down its efforts. The group's officials blamed the demise on a "false and misleading" summary of the plan by Attorney General Kamala Harris, a charge the Democrat denied.
The death of California Pension Reform's efforts also wounded Gov. Jerry Brown's pension proposals to the Democratic-controlled Legislature, one analyst said, by removing the threat of a more draconian measure going before voters.
"The prospect of the (California Pension Reform) ballot initiative would have given the governor some leverage to push for concessions," said Dan Schnur, director of the Jesse M. Unruh Institute of Politics at the University of Southern California and a former GOP strategist. "It's going to be a lot harder for him to get those concessions without the prospect of a more hard-line alternative."
Recent polls have shown growing support for a public pension overhaul. In December, 83 percent said pensions were a problem, while strong majorities said workers should pay more and the system should fundamentally change.
Despite that, the pension issue has always been a tough sell to deep-pocketed donors in the business community who are more interested in backing causes with an immediate impact.
The pension reform group filed two complex initiative proposals with the state. One would have eliminated traditional pensions for future employees and placed them in 401(k)-style defined contribution savings accounts.
The other plan mirrored Brown's idea to put new hires in "hybrid" plans that kept a smaller guaranteed benefit supplemented with a defined contribution component.
All three plans, the two written by California Pension Reform and Brown's proposal, featured provisions to eliminate pension spiking, push back the retirement age for full benefits and end additional retirement service credit purchases for future workers. They also require higher pension contributions from most current employees.
Brown unveiled official language for his 12-point plan last week, hoping it would garner the two-thirds vote from both chambers of the Legislature needed to put the measure on the November ballot.
Although a labor coalition hammered the proposal as an ill-timed "bomb," the governor has said that pension "arithmetic doesn't add up" because pension funds' obligations exceed their ability to pay them long term.
Some estimates peg those unfunded liabilities at $250 billion or more. Rising pension costs and falling pension fund investments have strapped some local governments in the last few years.
Moreover, Brown wants a pension overhaul measure on the November ballot to illustrate the state's seriousness about cutting government costs at the same time he asks voters to approve a tax increase he and Democrats want.
California Pension Reform officials said Harris skewed official descriptions that are used to explain the measures during signature collection and at the ballot box. That, in turn, made it impossible for the group to raise the $2 million to $3 million it needed to fund a petition campaign to put a measure on the November ballot, said the group's president, Dan Pellissier.
"The attorney general fundamentally misrepresented what we were doing," Pellissier said.
The descriptions for both measures said they would reduce benefits for public employees including "teachers, nurses and police officers" and prohibit "public retirement systems from providing death or disability benefits to future employees."
Pellissier said that Harris, in hewing to the wishes of labor to block the measure, specifically mentioned three government jobs that are particularly popular.
And, he noted, the proposals specifically said, "All government agencies that provide pension or other retirement benefits for their government employees may also separately provide death and disability benefits for the benefit of their government employees, regardless of the date of hire."
Harris spokeswoman Lynda Gledhill said, "The title and summary is accurate."
The group hit another snag when the nonpartisan Legislative Analyst's Office questioned how much money either plan would save.
Steve Maviglio, spokesman for labor coalition Californians for Retirement Security, which vigorously opposes changing guaranteed pensions, said that labor still has an interest in working with lawmakers and Brown on retirement reform.
"The lack of a gun to our heads won't make a difference," Maviglio said, because the unions and Democrats need to show voters they can foster retirement change or risk fueling sentiment for a so-called "paycheck protection" measure on the November ballot. That initiative, in part, would curtail union campaign funds collected from public employees money that usually goes to support Democrats and their causes.
For now, Pellissier is rooting for Brown to succeed, but expects the Legislature to balk, "if history is any guide."