emailed by Dan Morain courtesy T

Teague Paterson

What’s next for public employee pensions?

Published: Sunday, Mar. 30, 2014 - 12:00 am

Now that a pension-modification measure proposed by San Jose Mayor Chuck Reed will not appear on the November statewide ballot and a court ruling has blocked San Jose from slashing employees’ vested pension rights, opponents of public pensions are falling back on their old, false argument.

It’s a hackneyed line with little truth: Public employee labor unions are not willing to negotiate. That could not be further from the truth.

Across our state, when mayors and department heads have sat down with their employees’ unions to discuss pensions, they have found that common interest prevails over self-interest.

Consider firefighters in Salinas, who agreed to a contract that reduced retirement benefits. Or dispatchers, police assistants and clerical workers in Daly City who now contribute more of their own paychecks to pension accounts.

Police officers in Martinez made a deal to double their own contributions. Firefighters in Benicia and Imperial Beach, as well as miscellaneous city workers in Yorba Linda, compromised on reduced benefits.

Those are a few examples from this current calendar year. During the past several years, beginning when our economy was still in a recession, public workers in nearly 400 municipalities agreed to cost-saving changes including higher employee pension contributions, reduced benefits and delayed pay increases.

According to the California Public Employees’ Retirement System, firefighters, police officers, sanitation workers and other public employees have agreed to nearly 600 different changes to retirement agreements. And they do it without fanfare or headlines.

Even in Reed’s own backyard, the valley water district employees who ensure his water is clean and safe agreed to reduce pension benefits and increase their contributions.

Of course public workers are willing to negotiate. They have more at stake in this conversation than anyone else, and it’s in their best interests to engage in this difficult discussion.

For example, California’s public employees remained a part of the discussion in 2012 when Gov. Jerry Brown proposed a large-scale overhaul of the state’s pension system.

Yes, labor initially opposed the proposals, but once a path was charted labor accepted the changes, which will amount to a reduction of more than $100 billion to retirement and health care benefits earned by public workers during the next three decades.

More recently, the Legislature has taken up the issue of California State Teachers’ Retirement System’s long-term funding needs, and public school teachers throughout the state are engaged. A solution is being crafted to the estimated $71 billion shortfall, and the California Teachers Association agreed that increased contributions from educators must be part of the solution.

Despite labor’s demonstrated willingness, some politicians will continue to manufacture a wedge issue in the hope of improving their political fortunes. They will play a blame game to justify improvident “pension slashing” ventures. That course not only destroys the retirements of middle-class public workers, but it wastes public resources as legal fees mount and opportunities to make deals are missed.

San Jose is a prime example.

City employees there tried to negotiate and offered significant, painful compromises. The city instead charged ahead with a flawed ballot measure that not only cost taxpayers millions in legal fees, but has demoralized and driven out needed city workers. The measure epitomizes the wasted opportunity to bargain solutions and immediately lock in real budget savings.

The hard work that takes place at the bargaining table doesn’t garner news headlines. Political rhetoric, lawsuits, ballot measures and the resulting fallout do.

Public employees in California are loyal and hard-working. They make modest incomes in service to their communities. Not only do they earn less than their counterparts in the private sector, when it comes time to retire, they do so with an annual pension averaging just $31,000. The majority retire on less than that, below $18,000 annually.

Many, including our teachers, firefighters and police, do not receive Social Security. Whatever the next steps might be to address changes to California’s public pension systems, our state’s public workers have demonstrated they will be active, clear-eyed and productive participants in that discussion. Hopefully, this time their efforts will not go unheralded.

After all, they have the most at stake.


Teague P. Paterson, a partner of the Oakland-based firm Beeson, Tayer and Bodine, counsels labor organizations in pension and retirement matters.

Read more articles by Teague P. Paterson



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