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  • Manny Crisostomo /

    Assemblyman Warren Furutani hugs Speaker John A. Pérez after passage of the pension overhaul Friday. The measure still needs Gov. Jerry Brown's signature.

  • Manny Crisostomo /

    Senate President Darrell Steinberg backs a pension change deal Friday. After its passage, he said, "I hope this puts this issue … if not away, at least off to the side so we can focus on some positive agendas."

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California Legislature approves public pension changes

Published: Saturday, Sep. 1, 2012 - 12:00 am | Page 1A
Last Modified: Tuesday, Dec. 31, 2013 - 9:23 pm

California lawmakers approved a package of changes Friday aimed at cutting costs for public pensions, sending legislation to Gov. Jerry Brown despite objections from both organized labor and Republicans unhappy with its scope.

Last-minute legislation to overhaul California's workers' compensation system also was headed to the governor as the final day of the legislative session drew to a close.

Senate President Darrell Steinberg said the pension deal cut a fine path between preserving traditional state and local pensions while making them affordable for government employers.

"I hope this puts this issue – which has so dominated the public discourse for a long time – if not away, at least off to the side so we can focus on some positive agendas," Steinberg told reporters outside the Senate chamber after the vote.

The 40-member Senate cleared the measure 38-1. In the Assembly, 48 of 80 lawmakers supported the bill. Eight voted against it.

Assembly Republicans complained they were pressured to take a position on a flawed bill that didn't surface until the final week of the session. Others complained the measure was political pandering to cost-conscious voters ahead of November elections.

"This, to me, is a very insincere ploy to go out before the voters and say we did some pension reform," said Diane Harkey, R-Dana Point, "because you know how well that polls."

The pension bill's politics played out just a few hours after the California Public Employees' Retirement System made clear that most of the estimated savings from pension reform won't come until later years.

Because the most significant rollbacks apply as of Jan. 1, 2013 to new hires and not current workers, savings for the coming fiscal year will reach just $146 million at most, the state's massive public pension fund estimated. Twenty years from now, annual savings would come to as much as $2.5 billion.

CalPERS estimated savings will total between $43.3 billion and $55.8 billion over 30 years. The figures aren't adjusted for inflation and include local employers such as cities, counties and school districts.

The measure achieves those savings through several changes. The most significant for new workers: caps on how much of higher-earners' pay counts toward their pensions, retirement formula rollbacks and later retirement ages.

All employees, regardless of hire date, also would have to split their normal pension costs with their employers 50-50. Employees hired before Jan. 1, 2013, however, would have until 2018 to pay more, depending on their contracts.

Unions have hammered the legislation as an end-run on collective bargaining and said it scapegoats civil servants. Assemblyman Sandré Swanson, D-Alameda, said Friday he had the same concerns and wouldn't vote with his party.

Pension reformers won't be satisfied with the cuts, he said, and the measure puts organized labor on its heels.

"It's a slippery slope," Swanson said of the pension legislation. "What will it be next year?"

The wide-ranging changes to California's system for treating and compensating injured workers received bipartisan support.

Gov. Jerry Brown signaled his willingness to sign the workers' compensation measure in a statement early in the day, calling it "an extraordinary bill that will avert an imminent crisis where workers suffer and rates will skyrocket."

Key elements of SB 863 would increase permanent disability benefits by $740 million – an average hike of about 30 percent – and would create a $120 million program for workers injured severely enough that they cannot go back to a job at their previous wage level.

Republicans praised the measure for benefiting California businesses, too, by easing prospects of a potential 18 percent increase in their workers' compensation insurance costs.

Proposed by Los Angeles Democrat Sen. Kevin de León, it was supported by representatives of labor unions and employers but fiercely opposed by lawyers representing injured workers.

The goal was to increase benefits by creating savings through changes to the workers' compensation program likely to reduce the number of lawsuits filed over treatment and compensation.

Supporters hailed the effort as a way to correct inequities that have arisen from workers' compensation reform passed by then-Gov. Arnold Schwarzenegger in 2004.

Assemblyman Jose Solorio, a Santa Ana Democrat who jockeyed the bill on the Assembly floor, called the proposal an "all-out assault on waste, fraud and abuse."

"The current system is wrapped up in red tape, it's too expensive, and it's hurting California employers," added Assemblyman Brian Nestande, R-Palm Desert.

But Fresno Republican Assemblywoman Linda Halderman, a physician by profession, predicted the real-world effects of the bill will never measure up to supporters' claims.

"This is a harmful bill to the people we're purporting to help," she said.

Assemblyman Ben Hueso, D-San Diego, said lawmakers would feed voter cynicism of backroom deals by approving a 170-page overhaul crafted in the final days of the legislative session.

"Let's conduct ourselves with more honor and more dignity," he said. "Let's involve our community in our decisions."

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