The number of state workers drawing their first pension checks in the first four months of this year is down nearly 8 percent from a year ago, according to the latest data from CalPERS.

The four-month retirement rate continues a trend set in 2011, when initial retirements for the calendar year fell 8 percent.

Last month, the number inaugural state retirees fell to 627, down 2.8 percent from April 2011.

CalPERS counts new retirement data from mid-month to mid-month. Owing to the rules that govern cost-of-living adjustments, more state workers retire at the end of the year than at any other time. Those retirements show up in the January figures.

By contrast, far fewer state workers elect to retire in February, March and April. Relatively small shifts in retirement patterns during those months can produce big swings in the year-over-year percentages.

A total 1,711 state and local government and school employees with a CalPERS pension headed for the exits in last month, up 11 percent from a year earlier. Since January, 9,776 CalPERS members have retired, down 6 percent compared with the same four-month period in 2011.

Click tabs at the bottom of the spreadsheet below to toggle between tables with retirement data for state worker and for all CalPERS members.

CalPERS announced today that it will host retirement planning events in Sacramento, Anaheim and Santa Clara this summer.

Representatives from CalPERS, the Social Security Administration, the state's Savings Plus Program, ScholarShare college savings program and several employee and retiree organizations will be on hand. The events also include workshops on health and retirement benefits, service credit, Social Security and other pertinent topics.

CalPERS members can register via "My Education" area of the my|CalPERS member website at my.calpers.ca.gov.

Here are the dates, times and locations:

Sacramento
Aug. 10 - 11
9 a.m. - 4 p.m.
Sacramento Convention Center
1400 J Street
Sacramento, CA 95817

Anaheim
Aug. 17 - 18
9 a.m. - 4 p.m.
Sheraton Park Hotel
1855 South Harbor Blvd.
Anaheim, CA 92802

Santa Clara
Aug. 30 (one day only)
9 a.m. - 4 p.m.
Santa Clara Marriott
2700 Mission College Blvd.
Santa Clara, CA 95054

PHOTO: Big Stock Photo / Sacramento Bee file

Risky retirement plans aren't doing right by U.S. workers, SEIU Local 1000 President Yvonne Walker says in a CNN.com piece published today, and she thinks a California retirement-for-all bill is a "step in the right direction."

Walker's op-ed item refers to Senate Bill 1234, by Sen. Kevin de León, D-Los Angeles, which would establish a state-administered retirement fund for private-sector workers. The article, which you can read here, also mentions that New York is talking about a similar plan.

"Part of what we aspire to as Americans is being able to stop working with our dreams and reasonable expectations of retirement still intact," Walker writes.

SB 1234 is scheduled for a Senate Appropriations Committee hearing on May 14.

PHOTO: Yvonne Walker / Sacramento Bee 2008, Brian Baer

Senate President Pro Tem Darrell Steinberg, D-Sacramento, said this week that public pension reform legislation is still on track for this year, although he wasn't sure about the timing.

"I've said all along it's our obligation to deliver comprehensive pension reform legislation this session," Steinberg said during a meeting with reporters in his office Thursday morning. "Whether it's before or after the budget, I don't know. It depends on conversations with the governor and the Assembly, as well."

Lawmakers have a constitutional deadline to deliver a balanced budget by June 15.

A conference committee focused on pension reform has been meeting since October. Assemblyman Cameron Smyth, R-Santa Clarita, who co-authored failed legislation that co-opted Gov. Jerry Brown's pension proposals, said last week that lawmakers generally agree on many points but that major sticking points include switching future workers to a hybrid plan and changing the retirement age for those future hires.

PHOTO: Darrell Steinberg / Sacramento Bee 2011 file, Hector Amezcua.

From Dan Walters at our sister blog, Capitol Alert:

California's state and local government pension funds saw a 12.4 percent increase in their assets during the 2010 fiscal year, according to a new Census Bureau report, markedly higher than the national pension fund increase.

Click here for the rest of Dan's post. A spreadsheet with some of the pension data is posted below:

Editor's note, 4:50 p.m.: This post has been updated with news about Senate pension legislation.

Despite a procedural move this morning to push aside two GOP pension reform bills, one of the suspended measures' co-authors says the issue is far from dead.

In a telephone interview after the Public Employees, Retirement and Social Security Committee hearing, Cameron Smyth, R-Santa Clarita, said that informal conversations with lawmakers lead him to believe that there's general agreement about many points of the plan that he and Assembly Republican Leader Connie Conway introduced in February.

"It seems like there are two sticking points: the hybrid plan and changing the retirement age," Smyth said.

As expected, the committee put a hold on several public pension bills this morning, including the two measures by Conway and Smyth that co-opted Democratic Gov. Jerry Brown's 12-point plan that would, among other things, fundamentally change benefits for future workers.

Public Employees Committee chairman Warren Furutani, D-Gardena, several days ago told lawmakers that pension reform bills would be put on hold, in deference to a special committee formed to consider the issue. Furutani co-chairs the Joint Legislative Conference Committee On Pension Reform, which started hearings last fall and is expected to propose legislation during this session.

Two mirroring measures in the Senate Public Employment and Retirement Committee, Senate Bill 1176 and Senate Constitutional Amendment 18, both authored by Senate Republican Leader Bob Huff, have not been voted on. The deadline for moving fiscal bills out of policy committees is Friday.

Senate President Pro Tem Darrell Steinberg said in February that the Republicans were "clever" to claim Brown's plan as their own, but the GOP measures were "cut-and-paste" bills without analyses. The Senate's ranking Democrat has said several times that he expects a pension reform package to pass this year.

When asked it he thought that would happen, Smyth said, "From the conversations I've had, everyone seems serious," but that Republicans would "remain engaged" and keep Democrats accountable.

Conway blasted Democrats on the Public Employees committee for sending Assembly Bill 2224 and Assembly Constitutional Amendment 22 (both by Conway and Smyth) to interim study, effectively killing them.

"It is appalling that Democrats would prefer to stick their heads in the sand rather than enact bipartisan reforms," Conway said in a press release.

Legislation to create a state retirement account program for private sector workers in California cleared a Senate committee on Wednesday.

Senate Bill 1234, authored by Democratic Sen. Kevin de León, cleared the Senate Committee on Labor and Industrial Relations on a 4-1 vote. In favor: Sens. Ted Lieu, D-Torrence; Mark DeSaulnier, D-Concord; Mark Leno, D-San Francisco and Leland Yee, D-San Francisco.

Republican Sen. Mark Wyland, of Solana Beach, cast the lone no vote. Sens. Sharon Runner, R-Lancaster, and Alex Padilla, D-Los Angeles, didn't vote.

The measure creates a state-run "California Secure Choice Retirement Savings Trust" that would set up professionally-managed retirement savings accounts for private-sector workers.

Opponents -- insurers, a variety of trade industries and the California Chamber of Commerce, among others -- contend it establishes a needless new bureaucracy, creates uncertainty for employers and damages businesses that already sell retirement savings vehicles.

Critics have also charged that Democrats offered up the measure to counter pressure they've felt to change public employee pensions. Sen. President Pro Tem Darrell Steinberg rejected that notion and has said on numerous occasions that Democrats, who hold a legislative majority, will enact substantive pension reform legislation this year.

SB 1234 now goes to the Senate Appropriations Committee.

RELATED POST
California Democrats push pension plan for nongovernment workers

PHOTO: Senate President Pro Tem Darrell Steinberg, D-Sacramento (left), and Sen. Kevin de Léon, D-Los Angeles, walk to an event where they unveiled legislation on Feb. 23 to create a state-run retirement system for private sector workers in California. Rich Pedroncelli / Associated Press

The percentage of California state workers who filed to draw their first pension checks rose 61 percent in March compared with one year ago, according to new CalPERS' data, marking the second month in a row that more of them retired.

A total of 612 state workers retired in March. Still, the total number entering retirement in the first quarter of 2012 is down more than 8 percent compared with the first three months of 2011, owing to a big decline in January retirements this year.

CalPERS counts new retirement data from mid-month to mid-month. Owing to the rules that govern cost-of-living adjustments, more state workers retire at the end of the year than at any other time. Those retirements show up in the January figures.

By contrast, fewer state workers elect to retire in March than in any other month. February is the second-slowest month for inaugural pensioners. Relatively small shifts in retirement patterns during those months can produce big swings in the year-over-year percentages.

A total 1,704 state and local government and school employees with a CalPERS pension headed for the exits in March, up 41 percent from a year earlier. Since January, 8,605 CalPERS members have retired, down 9 percent compared with the same period in 2011.

Click tabs at the bottom of the spreadsheet above to see charts and more data about CalPERS systemwide retirements.

We never get all of what we learn into a news story, but this blog can give users the data, the notes and the quotes from the notebook that informed what was published.

The CalPERS computer system story in today's Bee draws from an item on the agenda of the fund's Pension and Health Benefits Committee, which is meeting this morning.

Here's the report on the system. Click here to watch the committee session live online, starting at 9 a.m. or after the Finance and Administration Committee ends its hearing, whichever is later.
CalPERS Workload Inventory

California's ranking Senate Republican and one of the GOP's representatives on a special pension committee have fired off letters to Gov. Jerry Brown and their Democratic colleagues in the Legislature, calling for a key committee vote on the governor's pension reform plan later this week.

Republicans have embraced Brown's plan and put it word for word in two bills. Senate Republican Leader Bob Huff of Diamond Bar and Sen. Mimi Walters of Laguna Niguel on Tuesday signed the letters delivered to Brown and pension conference committee co-chairs Sen. Gloria Negrete McLeod, D-Chino, and Assemblyman Warren Furutani, D-Gardena, pushing for a vote Friday when the committee meets in Southern California.

They asked Brown to "join us to demand immediate legislative action on your twelve point pension plan, which we believe represents the first steps that must be enacted to get our runaway pension system under control."

Walters is a member of the committee, which has been meeting since last fall to come up with a pension reform plan. Majority Democrats on the panel have been lukewarm, at best, to key provisions of Brown's plan, and the governor hasn't said much about it since he issued the draft legislation which was co-opted by Republicans in February.

President Pro Tem Darrell Steinberg has said that the Legislature will pass a comprehensive pension-reform measure this year.

Click the link below to read the letters.

The California State Teachers Retirement System said today that the gap between its promises to pensioners and its assets to pay them grew to $64.5 billion in fiscal 2011, up $8.5 billion from a year earlier.

The unfunded ratio grew from 29 percent to 31 percent despite the fund's investments turning a 22 percent profit for the year that ended on June 30, 2011.

CalSTRS Deputy CEO Ed Derman said during a conference call this morning that the fund would need to realize 10 percent returns for the next 30 years to climb out of the funding hole through investments alone.

Put another way, CalSTRS needs an annual infusion of money equal to about 13 percent of the annual wages earned by its 430,000 school-employee members. Actuaries said in a report due to the CalSTRS board on Thursday that losses carried over from the stock market collapse, a lowering of investment return assumptions and money allocated to a special benefits fund all contributed to the growth of the unfunded liability.

CalSTRS in February reported assets of $152 billion, sustaining its pension fund for 856,000 public school teachers and their families in California's 1,600 school districts, county offices of education and community college districts.

State lawmakers are still considering public pension changes, including a hybrid plan that would allow for a defined benefit component capped at a certain salary level.

Senate President Pro Tem Darrell Steinberg, D-Sacramento, revealed discussed the proposal to reporters on Monday afternoon, saying that plan is still in the formative stages.

Meanwhile the joint committee on pensions that has been meeting since late last year is scheduled to meet again on Friday in Southern California.

Gov. Jerry Brown has proposed a hybrid pension plan that mixes blends Social Security, a defined benefit and a more volatile 401(k)-style component that would aim to match 75 percent of an employee's three-year average income when they retire.

"We would prefer to take a different approach," Steinberg said, that would cap the defined benefit component to a percentage of salary, then supplement that with investment income.

"That makes more sense so that lower wage, middle wage workers are guaranteed a middle class pension," he said.

Like Brown, Steinberg linked pension legislation that cuts costs to gaining voter support for tax increases the governor and Democrats hope to put on the November ballot.

"I think there's an expectation that we'll pass pension reform this year and we intend to do so," Steinberg said. "And that is the right thing to do. And I think it also shows the people as we approach the November election that we're serious about the reform side of the agenda as well."

PHOTO: Darrell Steinberg during an interview at The Bee Capitol Bureau. / Hector Amezcua, Sacramento Bee, 2011

The Senate Public Employment & Retirement Committee is scheduled to hear several bills Monday, including three measures of interest to state employees:

SB 955 (Fran Pavley): Authorizes pension boards to give investment priority to in-state infrastructure projects over out-of-state infrastructure projects.

SB 1234 (Kevin de León): Establishes a guaranteed retirement savings system for private-sector workers. (Click here for a recent report on the measure.)

SB 1368 (Joel Anderson): Caps state employee pay at what the governor earns, currently about $174,000. (Click here for a recent State Worker column about the measure.)

The committee hearing is scheduled to start at 2 p.m. in the Capitol's Room 2040.

PHOTO CREDIT: California State Capitol / Sacramento Bee file, Rob Ferris

Are state workers dragging down state budgets around the nation? Or have public employees and their compensation packages become convenient political scapegoats?

A year ago the PBS news show "Need to Know" took on what it calls "one of the most contentious arguments in the news today." We ran across the report this morning while surveying state worker news. Although the item ran on March 11, 2011, the topic remains relevant today.

Watch Union Salaries and State Budgets on PBS. See more from Need to Know.

Marcia Fritz, the high-profile advocate for public employee reform, is being sued by two of her former employees for allegedly withholding money for their 401(k) accounts but failing to promptly make the contributions.

"There's absolutely nothing to it," Fritz said in a telephone conversation this afternoon. She said the action is "frivolous" and that she's planning to file her own counter lawsuit against plaintiffs Colleen and Tannith Mitchell.

The mother and daughter say that Fritz, a CPA and former head of Citrus Heights-based Marcia Fritz & Co., didn't make timely retirement savings contributions withheld from their pay checks, didn't pay them overtime and failed to provide meal and rest breaks.

Fritz said today that she has since sold her interest in the firm, although she's still available for consulting work.

Dave Low, chairman of union coalition Californians for Retirement Security, brought up the lawsuit during a pension policy face-off with Fritz at the Sacramento Press Club luncheon today. Low and Fritz have publicly sparred over the pension issue for the last few years.

Click the link below to read the court complaint.

From The Bee's Dale Kasler:

CalPERS today moved toward reducing its investment forecast by a quarter percentage point, a move that would cost the state's general fund $167 million a year.

Click here to read more.

The recommendation goes to a vote of the full board on Wednesday.

Next week, CalPERS Board of Administration will consider lowering its investment return expectations from the current 7.75 percent to 7.25 percent.

If that happens, pension costs would increase for state and local governments -- and employees would have to pay significantly more for air time after Mar. 15.

CalPERS Pension and Health Benefits Committee will take up the issue on Tuesday. If it accepts Chief Actuary Alan Milligan's recommendation, "The cost for service credit purchases under the present value method is expected to increase between 5 percent and 13 percent when looking at the most common ages at which members currently buy service. Note that the actual increase for some members would be more."

CalPERS members who buy air time before the deadline will get the benefit of the higher rate of return assumption. So will members with a request for an official air time cost estimate submitted to the fund before Friday.

Members have 60 days to purchase air time after receiving a price quote from CalPERS.

"No one (with cost esitimates in the queue) needs to worry," CalPERS spokesman Brad Pacheco told us Friday afternoon. "Those (prices) will be honored."

The benefit costs thousands of dollars. If you're thinking about buying air time, we recommend you start with CalPERS' online service credit calculator before contacting the fund for an official estimate. Click here for more details about how to get a quick ballpark idea of what air time would cost you.

We've embedded the return assumption rate item below. Scroll down to "Impact on Member Calculations," for the discussion of service credit costs.

Fewer state employees took their pensions last year, reversing a four-year trend that had seen more workers going into retirement.

And if the first two months of this year are any indication, more state employees will hang on to their jobs longer this year.

According to statistics provided by CalPERS in the chart above, 10,671 state workers applied for service retirement in 2011, down nearly 8 percent from the year before.

For January and February of this year, just 2,703 state employees submitted their retirement papers, a 17 percent decline from the same period in 2011.

The data shows the number of state applications for service retirements, which CalPERS counts from mid-month to mid-month. More state workers retire during the January period, which includes applications from mid-December to the end of the month, because of the way the fund calculates when they can receive their first retiree cost-of-living adjustment.

The number of state workers entering retirement had been growing each year, fueled by the state's aging workforce demographics. No doubt that furloughs, threats of wages being withheld during budget impasses, concessionary contracts and other issues during former GOP Gov. Arnold Schwarzenegger's administration pushed some employees to retire earlier than they might have otherwise.

(Click the tabs at the bottom of the table for charts and information about combined state and local retirement applications to CalPERS.)

Since there's no clearinghouse for exit interviews and no survey of why more state workers are sticking around, it's tough to say why fewer employees retired last year. What do you think?

During his weekly chat with reporters this morning, Senate President Pro Tem Darrell Steinberg, D-Sacramento, talked about the Republicans co-opting Gov. Jerry Brown's 12-point pension reform plan. (For our analysis, check out today's State Worker column.)

Here are quotes and observations from this morning's get together gathered by The Bee's Senate beat reporter Torey Van Oot:

"I thought that was clever."

"I'm glad that they are entering the debate. It is important to point out that when we last voted on pension reform in 2010, the rollback of SB 400, 40 percent of the Senate Republicans did not vote for that pension reform in large part because it affected public safety," said Steinberg, displaying a printout of the vote.

"I'm glad that they're in the debate, and we are going to do exactly what I said we are going to do. We are going to finish the work of our conference committee. We are going to produce a conference report that addresses all of the governor's 12 points, and we're going to bring this to a conclusion here in a way that represents real reform and at the same time maintains the strength of affordable defined benefit plans."

Steinberg said while the governor's plan includes the right elements, Republicans haven't done much analysis on their "cut-and-paste work" to introduce the package drafted by the governor.

"I thought it was a very clever political move. I complimented Bob (Huff) on it."

New legislation unveiled this morning aims to build a sort of CalPERS-for-all retirement savings system that the measure's author says could cover an estimated 7 million working Californians in the private sector.

Senate Bill 1234 by Los Angeles Democratic Sen. Kevin de León would require businesses with five or more employees to enroll them in a new "Personal Pension" defined benefit program or offer an alternative employer-sponsored plan.

De León, Senate President Pro Tem Darrell Steinberg and other political and labor leaders who touted the measure noted that public discourse has focused on public employee pensions.

The press event came one day after Republicans co-opted Brown's 12-point pension plan and offered it up as their own legislation. When asked if the Democrats were offering the bill hoping to relieve pressure on them to curb public pensions, Steinberg said, "Absolutely not."

The majority party is "committed to public pension reform. We're going to be analytical about it. We're not running away from it," Steinberg said, calling the de León bill the private-sector "bookend" to public pension reform.

"I hear a lot about 'pension envy,'" said Democratic Assemblyman Warren Furutani, who is co-chairing a joint public pension committee. And while many critics of the current system, including Gov. Jerry Brown, have called for reforms, Furutani said he sees many of those efforts as a misguided attempt to spread the private sector's retirement insecurity in the name of fairness.

"This bill turns that argument on its head," Furutani said.

Still, de León said his bill isn't intended to provide government-level benefits for the private sector. "It's a supplement," he said. "It's not a panacea."

The personal pension system's investments would be professionally managed by CalPERS or another contracted organization, de León said. Employees would contribute about 3 percent of their pay through a payroll deduction. Employers would not be required to provide matching contributions.

The fund would be managed "very conservatively," de León said, with investments tied to US Treasury bond rates.

Treasuries, considered among the safest investment vehicles, offer roughly half the 7.75 percent rate of return that CalPERS assumes on its investments.

Democratic Gov. Jerry Brown's 12-point public pension reform plan has some new supporters: Republicans.

GOP lawmakers told reporters this morning that they are introducing Brown's reform plan as legislation, exactly as he wrote it.

"We haven't changed one comma, one period or one word," Senate Republican leader Bob Huff said during a Capitol press conference to announce the party's plan.

He called on Democrats to join his party to enact four measures that together would put the plan to voters as a state constitutional amendment and alter pension law for both state and local governments.

The Republican's move comes after Republican-backed California Pension Reform suspended its cash-starved campaign to put pension reform on the November ballot. One plan that the organization was considering would have closely mirrored Brown's, including the centerpiece idea to put future state and local workers into hybrid pension schemes that blend a smaller traditional guaranteed pension with a more volatile 401(k)-style component.

Lawmakers could have donated to the campaign. When asked if any of the legislators had been approached for contributions or supported the initiative campaign before its demise, Huff brushed the question aside.

The 24 largest independent pension systems in California, including Sacramento County's, are facing a combined $135.7 billion in long-term obligations that they won't have the assets to cover, a new Stanford University report says.

Sacramento County is carrying $4.75 billion in unfunded liabilities, according to the report, with a funded ratio of 57.5 percent. Those numbers are based on an assumed rate of investment return of 5 percent used by the university's Institute for Economic Policy Research.

Generally, experts consider an 80 percent funding ratio for public pensions' financial health, but that figure is greatly affected by what the funds -- or in this case, Stanford researchers -- assume its investments will return. Many pension systems assume they'll earn 7.5 percent or more.

The average funded ratio of all 24 systems outside of CalPERS is 53.6 percent, using the lower Stanford investment return assumption. The research covers Alameda, Contra Costa, Fresno, Kern, Los Angeles, Orange, Sacramento, San Diego, San Francisco, San Joaquin, San Mateo, Santa Barbara, Sonoma, Stanislaus and Ventura counties. The cities whose pensions were examined include Fresno, Los Angeles, San Jose, and San Diego. The 24 systems account for more than 99 percent of independent system assets, Stanford says.

Between 1999 and 2010, the local municipalities' pension spending grew at 11.4 percent per year, more than the rate of growth for any other expenditure category, according to the report.

California Common Sense also sponsored the research by Stanford professor Joe Nation and student researcher Evan Storms. In December, Nation published a report that concluded California's three big statewide public pension systems have a combined $500 billion in unfunded liabilities. Public employee unions and CalPERS rejected Nation's conclusions.

MORE PENSION MATH: Funded Status, Benefits, and Spending Trends for California's Largest Independent Public...

Democratic Assemblyman Jerry Hill of San Mateo reintroduced a measure last week that caps the amount of state and local government employees' compensation used for pension calculations.

Assembly Bill 1639 would bring the state and local pensions in line with IRS rules that limit pensionable compensation. This year the limit is $250,000, up from $245,000 in 2011.

The law allows exemptions from the limit for public institutions. A few years ago the University of California's pension system was granted just such an exemption, although it wasn't implemented.

Then three dozen highly-paid UC employees demanded their pensions calculated on their full annual pay and not just the federal limit. That prompted Hill to introduce a measure similar to AB 1639 last year. The bill won unanimous approval in the Assembly.

Then Gov. Jerry Brown asked lawmakers to hold off on piecemeal public pension bills while he crafted a comprehensive reform package. Hill amended his measure to address some local pension issues in San Mateo County and struck the all-encompassing compensation-limit provision. Brown signed the more narrow measure.

Given its popularity last time around and it's restricted scope -- most public employees are nowhere near the compensation limit -- we expect Hill's new bill won't get much resistance. It might continue as a separate piece of legislation, although we think it could be absorbed into a larger pension reform package crafted by the Conference Committee on Public Employee Pensions in a month or so.

A new analysis of the public pension issue suggests that government should move from pensions that increase based on service time to plans that motivate performance with higher pay that then boosts retirement payouts.

"Solving the Public Pension Plan Dilemma," is written by Dan Van Bogaert, a adjunct professor who teaches human resource management courses at UCLA and Brandman University. His analysis appears in the latest volume of the Journal of Pension Benefits.

Bogaert makes several suggestions, from switching to 401(k)-style defined contribution plans and raising the retirement age for full benefits to mandatory pension funding ratios and restricting union bargaining to wages.

He also wants pension formulas that use a "replacement ratio" method that guarantees employees a certain percentage of their working pay when they retire, along with "pay-for-performance" compensation policies that would reward workers for work well done, not merely their years of service.

"The objective is to offer pay and incentivized rewards for performance, rather than offer entitlements connected to tenure. DB plan formulae based primarily on years of service would be de-emphasized, and replaced by incentives tied to pay, as a means to grow pension benefits," Bogaert writes.

(On a related note, Aaron McLear, who often spoke on behalf of California Pension Reform during its now-suspended campaign to qualify a state and local government pension initiative for the November ballot, last week answered the question, "What's next for pension reform?" Click this link to read his thoughts on CBS 13's website.)
Solving the Public Pension Plan Dilemma
IMAGE: www.photobucket.com

Gov. Jerry Brown's proposal to put future state and local government employees into hybrid retirement plans won't significantly cut the state's pension costs and could cost some employers more than their current defined benefit plans, the California Public Employees' Retirement System said in an analysis released Tuesday afternoon.

"For school employers, cost savings are expected to be 2 percent of payroll, while local public agencies will vary but are expected to be greater than the State overall," CalPERS staff analysis concluded, while employers' cost for safety workers' pensions would increase.

The fund confirmed that the governor's plan would lower benefits for new workers and shift more risk from employers to employees. Brown and other pension reformers have argued that both need to happen.

The report, requested by the Conference Committee on Public Employee Pensions, didn't consider administrative costs to manage a hybrid plan or to possibly close current defined benefit plans. It used two hypothetical retiring employees to illustrate how a hybrid plan would work:

As directed by the Committee staff, the hypothetical member is someone hired at age 32 that will eventually retire at age 67 for miscellaneous members and hired at age 27 that retires at age 57 for safety members.

Brown's goal is for a hybrid system that combines retirement income streams aiming to total 75 percent of an employee's income averaged over his or her final three work years. For miscellaneous workers, Brown's proposal envisions 25 percent coming from a 401(k)-type savings account, 25 percent from a defined benefit and 25 percent from Social Security.

Safety workers who don't pay into Social Security would receive 50 percent from a defined benefit. Hybrid pensions for the California Peace Officer Fire Fighter group would cost the state 2.1 percent more, CalPERS concluded.

Some links for those who want to dive into the deep end of the public-pension debate pool:

The CalPERS hybrid cost analysis
Hybrid Actuarial Analysis 2. 2012.docx
Summary of Gov. Jerry Brown's 12-point pension reform plan
Bill language of Brown's 12-point pension reform plan

PHOTO: CalPERS headquarters. Sacramento Bee photo.

Assemblyman Donald Wagner (left) has introduced a bill that would cap state and local pensions.

The Irvine Republican's measure, AB 1633, would cap pensions for workers who don't participate in Social Security at $100,000 per year. Workers who do participate in the federal program couldn't receive more than $80,000 per year from a state or local pension.

The cap would apply to pensions of employees hired on or after Jan. 1, 2013. Conflicting labor contracts in effect on that date would control until they expire, then the state law would be binding and could not be undone by subsequent union agreements.

On a related side note, Bee Capitol Bureau colleague Torey Van Oot, who covered the Democratic Party Convention in San Diego last weekend tells The State Worker than Gov. Jerry Brown didn't mention the "p-word," pensions, in his speech at the confab. Brown has put a 12-point pension reform plan before lawmakers and last month asked them to "do something real" to bring down governments' employee retirement costs.

PHOTO: Assemblyman Donald Wagner / www.asm.ca.gov

View more videos at: http://nbcbayarea.com.

Thanks to Blog User J for flagging this story for The State Worker.

A group that hoped to put a sweeping public employee pension reform measure on the November ballot is suspending its campaign.

"It's a sad day for pension reform in California," said Aaron McLear, spokesman for Sacramento-based California Pension Reform.

Although the group had drafted two measures that qualified for signature collection, it couldn't raise the $2 million or so needed to mount the petition effort for either one.

In November, Calfornia Pension Reform submitted a proposal to put future state and local public employees into defined contribution plans and another measure that would have shifted future workers into hybrid pensions. In January, it received the title and summary for both, intending to determine which would poll better and then shop that plan to potential campaign donors.

The language that came back from Attorney General Kamala Harris' office was worded to make it unpopular with voters, the pension reform group complained. The language was "false and misleading," it said in a press statement today.

And that made it harder to find money, McLear said.

Gov. Jerry Brown's plan to put future state and local government employees into hybrid pension plans and push back the full retirement age for new hires would hit low-paid workers the hardest, according to a recent academic analysis.

Researcher Nari Rhee of the pro-labor UC Berkeley Center for Labor Research and Education concludes that while Brown's suggested package of changes to public retirement systems contains "several sensible proposals," the pension design and age threshold changes "may impose a disproportionately large burden on low-wage workers."

Gov. Jerry Brown has sent language for his 12-point pension reform plan to the Legislature's Conference Committee on Public Employee Pensions.

The proposals are divided into two groups. The constitutional amendment Brown offered broadly outlines the pension changes more narrowly defined in the language to change state law. The governor's plan won't go forward without two-thirds of the Legislature voting to put the constitutional changes on the Nov. 6 ballot, which would then need voter approval from a majority.

The changes would kick in Jan. 1, 2013. Labor agreements that contradict the governor's plan would prevail until the pacts expire.

Blog User J, whose recent email follows, asked a question that we field every so often:

Jon:

You wrote: "All of the pension-change plans in play would alter guaranteed benefits for future employees and increase the out-of-pocket contribution costs for nearly all current workers."

I think the proposal by Brown would require current workers to pay "the equal share of the normal cost of the system." That is 14% which would require workers to pay 7%. We currently pay 8% and the buzz is that under Browns proposal we'd actually get a 1% decrease.

What do you show?

Senate President Pro Tem Darrell Steinberg said Thursday that the Legislature will consider some sort of pension reform bill this session, and he didn't rule out sending a hybrid plan for new hires to Gov. Jerry Brown for a signature.

The Sacramento Democrat talked at length about pensions during a morning meeting with the Capitol press corps on Thursday. The Bee's Torey Van Oot was there and passed this six-minute audio file from the event.

(Warning: To hear the file, you'll need software that plays m4a files, such as RealPlayer or QuickTime.) The recording is clear but low-volume, so turn up the sound on your listening device.)

A few highlights of Steinberg's responses to reporters' questions:

From reporter Charles Piller's story in today's Bee:

Duane Wiles, recently fired by the California Department of Transportation for fabricating bridge tests, has been allowed to resign instead.

This marks the second time Wiles has been "unfired" by Caltrans. The first was in 1998 for incompetence, insubordination, dishonesty and other problems, but the agency was overruled by the State Personnel Board.

This week's settlement agreement with Caltrans prevents a public airing of Wiles' admitted fraud and errors, and removes a public forum for examining whether agency higher-ups responsibly addressed the problem.

Here's the stipulated settlement agreement signed by Wiles, his attorney and Caltrans representatives.
Duane Wiles Settlement Agreement with Caltrans

The Joint Legislative Conference Committee on Pension Reform is scheduled to convene today at 1 p.m. at the Capitol. It's the third in a series of hearings on public employee pensions that is intended to vet the issue ahead of legislation.

Today's hearing will focus on hybrid pensions. The centerpiece proposal of Gov. Jerry Brown's pension plan would move future state and local government employees into hybrid plans, which blend a smaller traditional pension with a more risky defined-contribution component that yields retiree payments based on the outcome of investments.

California Pension Reform has proposed putting a similar hybrid plan or a tougher defined-contribution-only measure on the November ballot. The Sacramento-based group is hoping to raise money to circulate petitions for the measure it believes has the best chance of passing, but it hasn't yet announced which one that is.

Hybrid plans are a non-starter with labor.

All of the pension-change plans in play would alter guaranteed benefits for future employees and increase the out-of-pocket contribution costs for nearly all current workers.

The committee meeting today includes Assemblymen Michael Allen, D-Santa Rosa, Warren Furutani, D-Gardena and Jim Silva, R-Huntington Beach. Senate members include Gloria Negrete McLeod, D-Chino, Joe Simitian, D-Palo Alto and Mimi Walters, R-Laguna Niguel.

Click here to watch the hearing live on the California Channel, which also archives recorded events for later viewing.

From The Bee's Dale Kasler:

CalPERS said today it earned a 1.11 percent investment return on 2011, a fraction of the gains from the year before.

The results were announced at a board meeting in Monterey by CalPERS' chief investment officer, Joseph Dear.

Click here to read the rest of Dale's breaking news report.

Republicans have briefly addressed Gov. Jerry Brown's call for public pension reform in a web video featuring Assembly Republican leader Connie Conway and Senate Republican leader Bob Huff. The GOP leadership crafted their remarks on Tuesday before Brown delivered his State of the State today. Here's the pertinent section of the GOP's "response":

Finally, every dollar we spend for pensions is a dollar we don't have to spend for our public schools and for local law enforcement.

So we will work across party lines to enact strong public pension reform.

Governor Brown has proposed a public employee pension reform plan that is actually a good starting point.

Republicans are ready to enact his pension changes.

But Legislative Democrats are stalling it because their special interest union allies don't like the reforms.

Check out what everyone is saying about Brown's speech on Capitol Alert. This link will open the full text of the Republicans' reaction to the State of the State. Here's the video:

Republican Response to Gov. Brown's State of the State from CA Assembly GOP on Vimeo.

The herd of public pay and pension reform ballot measures is thinning out.

One pension fund reform measure is dead and several others will soon miss their petition deadlines.

Meanwhile, two plans backed by California Pension Reform are just a few days into the 150-day period to gather and submit signatures. The Sacramento-based group hasn't yet announced which measure it will promote. It has until mid-June to qualify a proposal for the November ballot.

We've called and left messages with the proponents of measures that are approaching their deadlines. If they call back with news, we'll report it here.

Here's a scorecard with links to measures facing deadlines this month or next:

Updated at 10:42 a.m. with Brown's extemporaneous remarks.

In this morning's State of the State address to the Legislature, Gov. Jerry Brown said a little about public pensions and his proposal to change them at the state and local level. Here's what he said, reading from his prepared text:

"As for pensions, I have put forth my 12-point proposal. Examine it. Improve it. But please take up the issue and do something real. I am committed to pension reform because I believe there is a real problem. Three times as many people are retiring as are entering the workforce. That arithmetic doesn't add up. In addition, benefits, contributions and the age of retirement all have to balance. I don't believe they do today."

Then Brown deviated from his prepared remarks with these comments:

"Starting tomorrow if you work for 30 years, are you going to live to 80, 90, 110? How much is that? How many people are retired? How many people are working? How many people are coming along? How does it all work out? Anybody who tells me that you feel absolutely confident that 40 or 50 years from now things are all going to be paid for are not looking at the numbers and the other comparable investments."

We never get all of what we learn into a news story, but this blog can give users the data, the notes and the quotes from the notebook that informed what was published.

Today's report on efforts to put a pension-change measure on the ballot notes that donations have started to come in and that the campaign is now entering a new phase to raise some quick cash.

Tench Coxe, a managing partner of Palo Alto-based Sutter Hill Ventures, is one of three Silicon Valley businessmen who contributed $25,000 to California Pension Reform at the end of last year.

He's also the only person to respond to a request for comment for today's pension initiative story in The Bee. We called and left a message for Coxe on Monday. He asked, through his assistant, that we email questions to him.

We never get all of what we learn into a news story, but this blog can give users the data, the notes and the quotes from the notebook that informed what was published.

Our report in today's fiber/cyber Bee notes that California Pension Reform received about $128,000 from donors even before it had an official ballot measure to show potential backers.

(Note: Californians for Retirement Security, which opposes CPR's efforts, told us that it wasn't obligated to report spending or contributions received fighting pension reform until now. Once the CPR measures received title and summary on Monday, the labor coalition or any other group fighting or supporting the proposals' qualification or passage must register and report.)

Here's the list of CPR contributors through Dec. 31 as reported by the campaign to the Secretary of State's office:

Girard Miller, a frequent contributor to GOVERNING magazine and senior strategist at the PFM Group, has a few words for both sides of the pension debate in a recent column titled, "Pension Puffery: Here are 12 half-truths that deserve to be debunked in 2012."

Among the ideas that Miller takes on:

"The pension mess was caused by greedy people (from the other side), not us."
"There's no crisis. The stock market will recover and then there is no problem."
"The solution is to replace pensions with 401(k) plans, like the private sector."
"This is a $3 trillion problem when you measure it using honest (risk-free) math."
"The average public pension is $23,000."
The $100,000 pension club.

Click here to read Miller's column.

The group behind two ballot proposals that would significantly alter public employee pensions has blasted the summaries assigned to them on Monday by Attorney General Kamala Harris.

California Pension Reform said in a press release this morning that parts of the descriptions are accurate but that the first-term Democrat makes "other statements that are either provably false or grossly misleading."

Spokesman Aaron McLear said this morning that CPR will still press ahead with raising money and collecting signatures after it conducts some polling and decides which proposal has the best chance of success "within the next week or so."

Harris' spokeswoman Lynda Gledhill said this morning that "we believe the title and summary is accurate."

This is the last installment in a series of posts looking back at the most-read State Worker blog items in 2011.

The debate over public employee pensions took an unexpected turn last February when the state's Little Hoover Commission suggested what had been the unthinkable: Change pension benefits promised to current state and local government employees.

A locally based research group, Californians for Fiscal Responsibility, had called for changing the guaranteed benefits promised to current employees. But now a government entity was suggesting the legally precarious and politically explosive idea.

The commission said that the public pension crisis is so severe that changing benefits for future workers won't fix it quickly enough. So the bipartisan panel said that state and local governments should freeze their defined-benefit pension promised to current employees and then prospectively place them into cheaper "hybrid" plans that blend smaller traditional pensions with more volatile 401(k)-type savings programs.

Both sides of the pension debate said that such a move would undoubtedly spark litigation. Conventional wisdom holds that pension promises are protected by both state and federal law, but the commission's report said that the principle should be directly tested in the courts.

Here's the link to the most-viewed State Worker blog post of 2011: "Commission's plan rolls back pensions for current workers," which ran on Feb. 24.

Postscript: The idea to alter pensions promised to current employees is dead for now. Two proposed ballot measures to alter pensions offered by another local group, California Pension Reform, and a plan promoted by Gov. Jerry Brown focus on lowering benefits for workers hired in the future.

This is the latest installment in a series of posts looking back at the most-read State Worker blog items of 2011.

Labor unions poured money and manpower into Democrat Jerry Brown's 2010 gubernatorial campaign, even while privately admitting concern over his notorious unpredictability.

Which Gov. Brown would they get? The one who, during his earlier turn in office, signed the law that allowed state workers to organize? Or would they get the Brown that cut 2,000 Caltrans engineers and vetoed raises for state workers?

They got a little of both.

This is the latest installment in a series of posts looking back at the most-read State Worker blog items in 2011.

Republican lawmakers created some brief political thunder but no legislative rain last summer with Senate Constitutional Amendment 13, which would have let voters amend the state constitution's public pension provisions.

GOP Sens. Tom Berryhill of Oakdale, Anthony Cannella of Ceres, Bill Emmerson of Hemet and Tom Harman of Huntington Beach introduced the sweeping legislation in May despite the insurmountable political hurdle of getting majority Democrats' support.

The bill contained provisions found in pension change plans offered by Gov. Jerry Brown and California Pension Reform, including hybrid retirement plans for new hires, an equal split of employer/employee contributions and a ban on service credit purchases. State and local governments would have been impacted.

The measure didn't even get a committee hearing after its introduction, but it still received plenty of attention from State Worker blog users when we first reported it on June 1 under the headline, "Senate Republicans introduce sweeping pension initiative."

This is the latest installment in a series of posts looking back at the most-read State Worker blog items in 2011.

California's government pensions became political shorthand for both parties last year. Republicans used the issue to argue that government needs to cut back. Democrats defended public pensions as a last-stand for middle-class retirement security.

Throw in polls that show voters have some strong opinions about pensions and you can see why it's a tempting topic for politicians hoping to grab attention.

Enter former Republican Assemblyman Roger Niello, who filed a ballot proposal in March that would have raised the age factor for full retirement to 62 for public employees, capped pension payouts and increased the out-of-pocket contribution for many workers.

The plan opened Niello to charges that he was merely pressing a hot-button topic to fuel his political career.

Still, this Mar. 24 post, "Former lawmaker Niello proposes pension rollback initiative," created an immediate firestorm that lingered for months after Niello decided to shelve the plan. The State Worker still receives an occasional call or email asking whether the Niello plan has a shot at becoming law.

It doesn't.

Niello now supports California Pension Reform's efforts to cut pension costs with one of two initiatives it has submitted to the attorney general for titles and summaries.

PHOTO: Roger Niello / Hector Amezcua, Sacramento Bee file, 2010

This is the latest installment in a series of posts looking back at the most-read State Worker blog items of 2011.

A group hoping to place a pension-change measure on the November 2012 ballot unveiled two plans last month, including one that mirrors a proposal by Gov. Jerry Brown to put new hires into "hybrid" retirement accounts that shift more investment risks to employees.

California Pension Reform, headed by former legislative staffer Dan Pellissier, is waiting for the official titles and summaries from the attorney general's office. The group expects those no later than Jan. 6, CPR spokesman Aaron McLear says. Then the organization will select the measure it thinks has the best chance of passing and, assuming it can raise the $2 million or so to gather signatures, start work on collecting signatures to qualify a plan for the ballot.

(Click here to read about the Legislative Analyst's take on the two measures.)

This Nov. 2 post introduced the plans' specifics and sparked nearly 400 comments: "California group moves to put pension overhaul on 2012 ballot."

Two public pension reform plans aimed for the November 2012 ballot wouldn't make much of a dent in government costs for decades, and the savings to employers' retirement expenses would be "offset to some extent by increases in other employee compensation costs," according to the nonpartisan Legislative Analyst's Office.

The LAO's take on both plans -- one a so-called "hybrid" system for new workers and the other a 401(k)-style retirement account for new workers -- concludes that they are fraught with legal peril and could wind up costing state and local government more or less depending on how they're "interpreted and administered."

The analyses share much of the same language and conclusions. Click here for the LAO's review of the defined contribution plan backed by California Pension Reform. This link opens the review of CPR's alternative hybrid pension proposal that mirrors a plan backed by Gov. Jerry Brown.

The LAO called Brown's plan "a bold, excellent starting point" for changing public pensions, but that it also "leaves many questions unanswered."

Putting "Stanford," "study" and "pensions" in a headline guarantees an online traffic surge. An April 2010 post, "Stanford study: Public pensions a half-trillion dollars short," ranked as the 15th most-viewed State Worker blog item among the 1,000 we posted that year.

This year's follow-up to that report by Stanford University professor Joe Nation ranked even higher -- and if the subsequent fallout from the report is an indication, rankled public-pension supporters even more.

Here's the Dec. 13 post on the latest Stanford study, "Stanford study pegs California pensions' shortfall at $500 billion."

Although Gov. Jerry Brown's public pension reform plan is still in the formative stages, it's become the reference point in the debate about government retirement. For example, the public pension study released by the Stanford Institute for Economic Policy Research specifically addresses the Brown plan. Pollsters have also surveyed public opinion on the governor's pension ideas.

So what do you think? What's next for Brown's pension plan?

California Common Sense has posted an adjunct "data transparency portal" supplementing this morning's Stanford study that estimates California's three biggest pension funds are carrying up to $485 billion in unfunded liabilities.

The CCS website allows users to parse the Stanford data by pension fund and by various metrics, including the one captured below that compares unfunded liabilities to general fund spending (excluding K-12 education and Health and Human Services).

This link opens the CCS website.

Stanford's Institute for Economic Policy Research has issued it's new report, "Pension Math: How California's Retirement Spending is Squeezing the State Budget." Click here for our previous post on the study.
Pension Math: How California's Retirement Spending is Squeezing the State Budget

Californians, both those in government and those outside of it, support changing public employee pensions, according to a new Public Policy Institute of California survey.

A little more than 8 in 10 of those surveyed said amount of money government is spending on public pensions is a problem, with 44 percent indicating it's a big problem and 39 percent saying it's somewhat of a problem.

The most stunning finding in the poll is the response to this question:

The U.S. Bureau of Labor Statistics last week reported that:

Employer costs for employee compensation averaged $30.11 per hour worked in September 2011. Wages and salaries averaged $20.91 per hour worked and accounted for 69.4 percent of these costs, while benefits averaged $9.21 and accounted for the remaining 30.6 percent. Total employer compensation costs for private industry workers averaged $28.24 per hour worked in September 2011.

State and local government employers spent an average of $40.76 per hour worked for employee compensation in September 2011. Wages and salaries averaged $26.57 per hour and 65.2 percent of compensation costs, while benefits averaged $14.19 per hour worked and accounted for the remaining 34.8 percent. Total compensation costs for management, professional, and related occupations, which represent approximately half of all state and local government employment, averaged $49.37 per hour worked. Average hourly compensation costs were $30.86 for service occupations and $28.49 for sales and office occupations.

Click here for more info from the BLS Thursday report.

With just 400 to 450 words for our weekly State Worker column, most of what we learn each week never sees print. Column Extras give you some of the notes, the quotes and the observations that inform what's published.

Our State Worker column this week looks at the recent hearing held by the Legislature's newly created Conference Committee on Public Employee Pensions. Here are some CalPERS references that were the source of numbers in the column.

Here's CalPERS' preliminary analysis of Brown's pension reform plan.

This link opens a fact sheet on CalPERS pension statistics and trends through fiscal 2010-11, including a table of employee pension contribution percentages.

Thursday's hearing on Gov. Jerry Brown's pension proposal marked the second hearing held by the Legislature's newly created Conference Committee on Public Employee Pensions, and there may be more.

Assembly Speaker John A. Pérez and Senate President Pro Tem Darrell Steinberg announced the creation of the committee in September, saying the findings of its interim hearings would "fast forward consideration of the issue before the Legislature reconvenes in January."

But the tone of Thursday's hearing suggested the preliminary work of the committee, which was supposed to report back to the Legislature next month, could extend well into the new year.

"This cannot be a two-hearing answer," said Democratic Sen. Gloria Negrete-McLeod, co-chair of the panel.

A spokeswoman for Democratic Assemblyman Warren Furutani, also a co-chair, said the committee will probably end up holding at least four hearings in all "in order to get through all of the information."

Brown, who appeared before the panel to make the case for his plan, acknowledged that devising a solution could take time. The Democratic governor, who is still working out specifics of his own plan, suggested lawmakers act carefully but at a "deliberate speed."

"When we're dealing with a 40-year matter, you don't have to deal with it in 40 minutes, or 40 days or even 40 months," Brown said. "We have time here. ... I think we have a little time to work on it, realizing that each day we are off, we are digging our hole a little deeper."

Gov. Jerry Brown will be on hand this afternoon as a legislative panel convenes to review his pension proposal.

The Democratic governor will join Labor and Workforce Development Agency Secretary Marty Morgenstern and Department of Finance deputy director Michael Cohen as they present his plan to the Joint Conference Committee on Public Employee Pensions.

The 1 p.m. hearing marks the Legislature's first public vetting of the governor's proposal, which would raise the retirement age and scale back pension benefits for future workers.

Lawmakers will also hear testimony and analysis of the 12-point plan from the Legislative Analyst's Office, public employee pension systems CalPERS and CalSTRS, the University of California and representatives of public employee unions and employers.

This isn't the first time Brown has made a cameo at a public hearing on one of his proposals. Earlier this year, he appeared before a joint budget committee to make the case for extending temporary tax increases to help close the budget deficit. After months of negotiations, that proposal failed to win approval in the Legislature.

PHOTO CREDIT: Gov. Jerry Brown unveiled a 12-point public pension reform on Thursday, Oct. 27, 2011 that would ask voters to increase the age at which future state and local government employees could retire with full benefits and place them in riskier retirement plans than current workers. Hector Amezcua/Sacramento Bee.

California lawmakers will delve into Gov. Jerry Brown's 12-point pension plan on Thursday, the second legislative hearing by a two-house committee looking at the state's pension systems.

Brown's plan would generally propose less generous benefits for new hires and raise the retirement age.

The committee, which held its initial hearing Oct. 26 in Carson, is chaired by Assemblyman Warren Furutani, D-Gardena, and Sen. Gloria Negrete McLeod, D-Chino.

Editor's Note: This post has been updated to indicate that Brown's proposal would raise, not lower, the retirement age. Updated at 1:51 p.m. Nov. 29, 2011.

Read the agenda:

Pension Agenda

David Crane, the jobs and economic growth adviser for former GOP Gov. Arnold Schwarzenegger and now president of Govern for California, says that pension changes need to be part of solving the multibillion-dollar state budget deficit expected next year.

Crane, whose group aims to help elect state legislators who demonstrate the "courage" to tackle major issues facing California, issued a statement in response to the Legislative Analyst's forecast Wednesday that the Golden State is headed for a nearly $13 billion shortfall going into fiscal year 2012-2013.

State workers remember Crane as a leading voice for changing the public pension system during Schwarzenegger's last term. He continues to write about pensions, although he's not directly involved in efforts by Gov. Jerry Brown or California Pension Reform to put reform measures on the November 2012 ballot.

Here's what the Democrat and successful global investor says lawmakers need to do:

• Renew the temporary tax increase adopted in February 2009;
• Enact the mandatory single sales factor corporate tax reform proposed by Governor Brown earlier this year but dedicate the revenues from that change to the general fund; and
• Enact the pension reform proposed by Governor Brown but modified to include proposals recently outlined by some pension reform groups to save more money in the short term.

Here's the full press release:

State pensions will cost government employers about $200 million more in fiscal 2016-17 than expected next year, according to a new report from the Legislative Analyst's Office. About half of those rising costs will hit the general fund.

The chart above comes from page 40 of the LAO report released this morning. It depicts California's general fund employee retirement expenses past, present and future.

Here's a slice of what the report says:

Steve Maviglio, spokesman for Californians for Retirement Security, read this morning's report about tweaks to two pension reform ballot proposals and emailed a comment on behalf of the labor coalition:

"They can shop this measure to lawyers on the East Coast and try to get their funding from an Enron billionaire from Texas," Maviglio said in the email to The State Worker, "but at the end of the day, as the LAO has said, trying to slash the retirement benefits of California's public workers is unconstitutional, period."

What the Legislative Analyst's Office said was this:

California Pension Reform, the group pushing to put a public pension rollback measure on the November 2012 ballot, on Tuesday filed amendments with the attorney general intended to clarify their provisions.

The attorney general, which analyzes proposed ballot initiatives and then assigns them a title and summary, allows amendments to be made within 15 days of their submission. CPR first filed its proposals on Nov. 2.

In a statement released Tuesday afternoon, CPR President Dan Pellissier said that the changes were prompted by criticisms that some elements of the proposals might not be constitutional.

"As a result, we have contacted noted constitutional scholars across the country," Pellissier said. "They have made recommendations they believe will enable the courts to say this initiative is constitutional."

It seems like everybody is talking about public pensions.

Gov. Jerry Brown has a 12-point plan he wants to put before voters next year. Republicans applaud the governor for offering up the proposals and have challenged him to call a special session to address the issue. Democrats are wary of Brown's plan.

Meanwhile, California Pension Reform has filed two pension proposals with the attorney general for title and summary, aiming to put one of them on the November 2012 ballot. Labor insists that any pension downgrades should be negotiated, not just legislated.

So what do you think?

Four GOP lawmakers this morning praised Gov. Jerry Brown's 12-point plan to change public pensions, then challenged him to go a step further by calling a special session to address the issue.

"The Legislature needs to give our full attention to this, right now," Senate Republican leader Bob Dutton said at a press conference held in his office. "After the first of the year, we're going to be all budget, all the time."

The Rancho Cucamonga Republican said that he sent his request that Brown reconvene lawmakers before the regular session starts in January. Dutton said he hadn't received a response as of this morning.

Dutton and three other GOP senators -- Tom Berryhill of Oakdale, Tom Harman of Huntington Beach and Mimi Walters of Laguna Niguel -- took turns praising Brown for offering a series of public pension changes, which the Legislative Analyst's Office described Tuesday as "a bold, excellent starting point" though it "leaves many questions unanswered."

"I want to commend the governor publicly," Harman said. "I think he is serious."

The GOP caucus has a checkered history when it comes to public pension policy. Dutton was among a small number of Republicans who tried to block legislation last year that lowered benefits for new state hires and hiked what all state workers pay into their pension funds. Then-Gov. Arnold Schwarzenegger desperately wanted the measure and had Democrats and labor on board.

California Pension Reform's Mike Genest has issued this statement about the LAO's review of Gov. Jerry Brown's pension proposals:

It is disappointing that the LAO omits the most critical flaw of the Governor's proposal: By his own admission his plan only solves $4-$11 billion of what is at least a $240 billion unfunded liability. While the Governor's plan has merits, it solves less than 5% of our problem. We need bold, comprehensive reform now and cannot continue to wait as politicians debate the issue and tinker around the edges.

California Pension Reform recently filed two ballot proposals with the attorney general's office for official title and summary. It hopes to start gathering signatures in January in hopes of qualifying one of the two measures for the November 2012 ballot.

The Legislative Analyst's Office has released an eight-minute video, embedded below, that sums up its review of Gov. Jerry Brown's pension reform proposal.

"We view Gov. Brown's (pension) proposal as a bold one, and one that should very carefully considered by the Legislature," says the LAO's Jason Sisney.

Still, he says, "we don't understand some key aspects" of Brown's proposals, particularly how putting new employees into a hybrid plan or pushing back new hires' qualifying retirement age would work.

The LAO also has questions about how pensions could be capped and notes that the unfunded liabilities of the CalSTRS and UC pension systems aren't addressed.

"In our view ... it doesn't really make a whole lot of sense to change all of these (UC and CalSTRS) benefits substantially and not think about how they're going to be funded into the future," Sisney says.

And, Sisney notes, the governor's plan is silent on retiree health benefits for local government workers.

Californians for Retirement Security, a labor coalition representing 1.5 million state and local public employees, has issued a statement in response to this morning's LAO review of Gov. Jerry Brown's pension reform package.

Here's the statement emailed to media a few minutes ago quoting Dave Low, the coalition's chairman:

The LAO's mixed assessment of the Governor's pension proposals hits the nail on the head when it says that the Legislature should move forward in a deliberate and reasoned fashion to craft solutions to California's complex pension systems. There are far too many unanswered questions and lack of details to fairly and accurately evaluate the impact of these proposals. Those proposals that impair the negotiated benefits of current employees are a legal dead end. As the report points out, these are matters that should be settled at the bargaining table, not in courtrooms. We will continue to work in the upcoming Legislative session, just as we have for the past several years, to achieve the spirit of the Governor's reforms without taking a wrecking ball to the retirement security of California's teachers, firefighters, police officers, and other public workers.

PHOTO: Dave Low / Courtesy California School Employees Association

The Legislative Analyst's Office has published its review of Gov. Jerry Brown's pension plan, concluding that it is "a bold, excellent starting point" for changing public pensions, but that it also "leaves many questions unanswered."

In particular, we do not understand key details of how his hybrid benefit and retirement age proposals would work. Moreover, the Governor's plan leaves unaddressed many important pension and retiree health issues, including how to address the huge funding problems facing the state's teachers' retirement fund, the University of California's (UC's) significant pension funding problem, retiree health benefit liabilities, and other issues. In making significant changes to pension and retiree health benefits, we would urge the Legislature also to tackle these very difficult issues concerning the funding of benefits.

The report also cautions that Brown's plan to mandate current employees pay more toward their retirement accounts is a "legal and collective bargaining minefield." Ditto for suggestions by The Little Hoover Commission and others (not Brown) that current employees' accrued benefits could be frozen and then reduced going forward:

Watch Modesto for an indication of the public's mood about public pension "reform." Residents of the Central Valley city on Tuesday consider three ballot measures that sound a lot like retirement changes proposed by Gov. Jerry Brown and others rolled out last week by the California Pension Reform group.

Measures Q, R and S, written by city councilman and mayoral candidate Brad Hawn, are non-binding advisory measures, but they would gauge the direction that that residents in the Stanislaus County seat think their officials should take labor negotiations.

Measure Q asks whether the city should transition from traditional defined benefit pensions for employees to defined contribution plans common in the private sector. Measure R asks whether the city should jettison the single-year salary factor for pension calculations in favor of a three-year salary average. Measure S asks voters to weigh in on increasing the minimum retirement age, which for most city employees is 55. Police officers and firefighters can start drawing pensions at age 50.

Click here for the measures' ballot language. Click here for the Stanislaus County sample ballot. Analyses and statements for and against Q, R and S start on PDF page 36.

Labor has launched local ads against the measures, including the one above that criticizes pushing back the retirement age for police.

Hat tip to Blog User S for alerting us to the union ad.

Editor's note, 11:33 a.m.: Due to incorrect information provided by California Pension Reform, an earlier version of this post indicated that full-career public safety workers would receive their full benefit at age 60 after 30 years of service under a defined contribution plan. The correct age is 58 for those workers.

California's current and future state and local employees would pay more for their pensions under two ballot initiative proposals submitted to the state attorney general today with the intent of putting one of them to a statewide vote next year.

"Seventy percent of voters think it's time," said Dan Pellissier, president of California Pension Reform, referring to public opinion polls on public pensions.

Editor's note: A technical problem with the poll forced us to reconstruct it today at 12.56 p.m., wiping out votes prior to that time.

In case you missed it, Bee Capitol Bureau colleague David Siders reported last week that Democratic lawmakers are skeptical about Gov. Jerry Brown's plan to reduce retirement benefits for new public employees and increase contributions for most current and future state and local government workers.

"Even as Gov. Jerry Brown announced his plan Thursday to reduce pension benefits for public employees across the state, its prospects of passing intact appeared dim.," Dave wrote.

Brown wants to put the plan on the November 2012 ballot . That means he needs support from two-thirds of the members in the Assembly and the Senate. It's possible lawmakers will marshal that many votes for some of the proposals and for not others.

What do you think will happen?

We'll be speaking this morning with David Watts Barton on Capitol Public Radio's "Insight" on KXJZ (90.9 FM) between 10 a.m. and 11 a.m.

This link opens the show's website. Click the "Listen Live" button near the top of the page to hear the interview, which is slated as the first segment. We'll be talking about layoff warnings issued last week by the Department of Corrections and Rehabilitation and Gov. Jerry Brown's new public pension reform plans.

"Insight" keeps exhaustive archives, so you can click in later if you miss the live broadcast by selecting today's date on the calendar below the "Listen Live" button.

Gov. Jerry Brown unveiled a 12-point public pension reform plan this morning, and the reactions are already coming in. We'll keep adding to this post, so keep coming back to see what lawmakers as well as political, business and union leaders and others are saying.

Details of Gov. Jerry Brown's pension change plan are leaking out tonight.

Two of the most significant components: A mandatory hybrid pension system and aligning the retirement age to receive full benefits with Social Security, currently 67 for most employees. Both of those provisions would apply only to new hires.

Click here for the breaking news story by David Siders and look for more details in Friday's Sacramento Bee.

As we noted in this morning's news round up, Bee Capitol Bureau colleague David Siders reports that Gov. Jerry Brown will unveil his much-anticipated pension "reform" proposals on Thursday. We hear that Brown is meeting with government and labor officials today to give them a preview of his plan.

The Thursday announcement will follow today's special legislative committee hearing on pension reform.

Brown's office has kept details of the governor's plan under wraps and the governor himself has offered no specifics.

We expect the governor will suggest many of the same ideas that he proposed as a gubernatorial candidate and then again after taking office earlier this year.

But one nagging pension reform tease that Brown threw out last week has some labor interests worried.

A special legislative pension committee will hold the first of three hearings on Wednesday from 10 a.m. to 1 p.m. at the City of Carson council chambers, 701 East Carson St. in Carson.

The agenda suggests that this first hearing has plenty of pro-public-pension voices from labor, from Dave Low of California School Employees Association and Californians for Retirement Security to Terry Brennand, Senior Government Relations Advocate, SEIU California.

The city is going to webcast the hearing through its website, which you can access here.

Sitting on the committee: Assemblymen Michael Allen, D-Santa Rosa, Warren Furutani, D-Gardena and Jim Silva, R-Huntington Beach and Sens. Gloria Negrete McLeod, D-Chino, Joe Simitian, D-Palo Alto and Mimi Walters, R-Laguna Niguel.

The labor coalition Californians for Retirement Security is planning to hold a "Pension Truth Squad" press conference just before the hearing "to set the record straight about attacks on their pensions," according to a press release. The events serve to put a human face on the politically volatile pension debate by putting government workers and retirees to tell their stories before the media.

The coalition said that public workers will also testify at the hearing. Click here for the coalition's press release and advisory.

IMAGE: The City of Carson seal / http://ci.carson.ca.us

The Califonia Public Employees' Retirement System is live Tweeting its Educational Forum for employers at the Long Beach Convention Center.

CalPERS spokesman Brad Pacheco says that about 600 employer representatives attending the event, which started today and runs through Wednesday. Follow events on Twitter at #CalPERSEdf.

Speaking of CalPERS and the Internet, the fund has scheduled a Nov. 10 "Planning Your Retirement Webinar" that starts at 9 a.m. and ends a 11 a.m. Topics the online session will cover include:

Legislative leaders have named six lawmakers to a joint committee that will hold hearings on changes to public employee pension systems.

Assembly Speaker John A. Pérez has appointed Michael Allen, D-Santa Rosa, Warren Furutani, D-Gardena and Jim Silva, R-Huntington Beach.

Senate President Pro Tem Darrell Steinberg has appointed Gloria Negrete McLeod, D-Chino, Joe Simitian, D-Palo Alto and Mimi Walters, R-Laguna Niguel.

Negrete McLeod and Furutani will co-chair the committee.

The first of three committee hearings is scheduled for 10 a.m. to 1 p.m. on Oct. 26 at the City of Carson council chambers, 701 East Carson St. in Carson. The committee hasn't yet announced locations or dates for two hearings it plans to hold in the Bay Area and Sacramento over the next several weeks.

From The Bee's David Siders on our sister blog, Capitol Alert:

BEVERLY HILLS - Gov. Jerry Brown said this afternoon that he will propose pension changes requiring a constitutional amendment and a public vote, though he declined to discuss them in any detail.

Read the rest of Dave's report by clicking here.

State Treasurer Bill Lockyer said today that pension reform must lower costs on the public-sector side and strengthen retirement security for private-sector workers, remarks that echoed the new argument that public employee unions are making in defense of retirement benefits.

In his speech to the Northern California Public Retirement Seminar, Lockyer said the dual-track approach would help close the wide gap between public and private pensions and help ensure the "political sustainability" of public retirement systems.

Lockyer suggested that the next generation of public pensions should be "anchored" in Social Security, with a defined benefit component and a professionally-managed defined contribution component. He also thinks that Gov. Jerry Brown may propose a "three-legged stool" public pension program:

The California's state and local public employee retirement systems had $470 billion in cash and investment holdings in 2009, down 27 percent from $643 billion in 2008, according to new statistics released by the U.S. Census Bureau.

Nationwide, state and local government retirement systems saw their cash and investments lose a collective $726 billion, falling to $2.5 trillion in 2009. The 23 percent drop in 2009 followed a $177 billion loss for the funds in 2008.

The data come from the Local Public Employee Retirement Systems Survey, which takes an annual snapshot of the financial activity and membership information of the nation's state and local public employee retirement systems. The figures include funds' revenues, expenditures and investment holdings nationally and broken out by state and local government categories.

Some of the same factors squeezing public retirement systems are affecting private pension providers.

A new report by the Society of Actuaries, "The Rising Tide of Pension Contributions Post-2008: How Much and When?," says that sponsors of private, single-employer defined benefit pension plans are going to have to kick in more cash over the next five years to cover their minimum required contributions.

A review of more than 400 private DB plans found that the recession, the equity market downturn and low interest rates that drive up costs of providing retirement benefits have together stressed the private pension plan system.

According to the report, employers contributed an average of $70 billion per year over the five years ending in 2009. Required contributions are expected to average $90 billion per year between 2010 and 2020, reaching a peak level of $140 billion in 2016.

"The data shows that employers, on average, have been contributing well in excess of the minimum requirements for the last several years," said Joseph Silvestri, a retirement research actuary with the SOA, in a press statement issued with the report. "While the system as a whole is successfully navigating the rising tide of minimum required contributions, there will be individual employers for whom the pension plan funding requirements pose a greater short-term challenge."

With just 400 to 450 words for our weekly State Worker column, some of what we learn each week never sees print. Column Extras give you the notes, the quotes and the observations that inform what's published.

Our column in today's fiber/cyber Bee cites several statistics about union coverage of U.S. employees and public opinion polling about organized labor.

Click here for more information about the 75-year-old Gallup polling (pictured in the graph above) of responses to the question, "Do you approve or disapprove of labor unions?"

We've also put together this spreadsheet on public employee and private employee union membership and coverage using data compiled by Barry Hirsch and David Macpherson on unionstats.com.

A new study by the Center for Retirement Research and Boston College refutes the notion that state and local government workers as a group end up a lot richer than their private sector counterparts.

The study used 1996-2006 data from the University of Michigan's Health and Retirement Study to examine whether state and local government employees are wealthier in their retirement years.

UC Berkeley's Center for Labor Research and Education has released "Meeting California's Retirement Security Challenge," which argues for a return to private-sector defined benefit pensions.

The center said that the work was supported by International Brotherhood of Electrical Workers Local 1245, Service Employees International Union California State Council, and Californians for Retirement Security.

Over on our sister blog, Capitol Alert, Dan Walters has some details. We've also posted the 118-page research compilation below.

The Rhode Island Retirement Security Coalition, a labor organization fighting for public employee retirement benefits, has posted a video that explains the unions' side in that state's pension debate. The arguments in the 10-minute piece are similar to those made by public employee unions in California and elsewhere.

Hat tip to Blog User D for calling this video to our attention.

A sweeping measure that would curb pensions for current government employees, retirees and future hires has been given approval to collect signatures to qualify it for a statewide vote.

The "Pension Solvency Act" would take effect immediately upon voter approval and apply to all California public pension systems. The provisions include:

Legislative leaders said late Friday that they'll hold hearings on public pensions between now and when the Legislature reconvenes in January, according to this report by The Bee's Torey Van Oot.

Here's the joint press release from Senate President Pro Tem Darrell Steinberg and Assembly Speaker John A. Pérez:

SACRAMENTO - Assembly Speaker John A. Pérez (D-Los Angeles) and Senate President pro Tem Darrell Steinberg (D-Sacramento) today announced the next steps the California Legislature will take to address challenges facing the state's pension systems, establishing a rare interim Conference Committee to fast forward consideration of the issue before the Legislature reconvenes in January.

In a joint statement Steinberg and Pérez said:

"We are eager to add improving the pension system to the other major agreements the Legislature and the Governor have arrived at this year.

"Pension issues have been discussed in various legislative venues throughout the year. The Governor has also been working on comprehensive pension proposals throughout the summer. Those efforts provide an important focal point to drive discussions forward to completion.

"We've already made major pension changes, including rolling back retirement formulas for new state employees and increasing current and future state employee contributions toward their retirement. Our intent is to build upon that foundation.

"The issue of public pensions includes a complex web of policy, fiscal and legal concerns. The Legislative Analyst's Office recently described potential legal problems and unexpected costs with various pension proposals. Recent stock market swings also require a thorough look at the impact of proposed reforms on CalPERS and CalSTRS assets, and consideration of alternatives to the current system.

"In the coming weeks, the Legislature will begin evaluating potential pension changes through a special conference committee to be Chaired by Assemblymember Warren Furutani (D-South Los Angeles County), Chair of the Assembly Public Employees, Retirement and Social Security Committee, and a Senator to be named later.

"The bipartisan Conference Committee composed of Assemblymembers and Senators will hold public hearings on pension reforms. In coordination with the Governor, the hearings will include participation from the Department of Finance, the Legislative Analyst's Office, CalPERS, CalSTRs and other key experts and stakeholders, and will report back to the Legislature when we reconvene in January."

UC Santa Barbara economics lecturer Lanny Ebenstein can begin collecting signatures for three ballot initiatives that would eliminate public employee collective bargaining, create higher tax rates for six-figure CalPERS and CalSTRS pensions and raise the retirement age for public employees in both systems.

The Secretary of State's office announced today that Ebenstein has until Feb. 3 to collect 807, 615 signatures from qualified voters for each of the measures to put them on a statewide ballot.

With just 400 to 450 words for our weekly State Worker column, most of what we learn each week never sees print. Column Extras give you some of the notes, the quotes and the observations that inform what's published.

Our column in today's Bee looks at rumors bouncing around the Capitol that Gov. Jerry Brown is about to unveil a public pension agenda, call for legislative hearings between legislative sessions and then push the issue early next year as a carrot for Republicans he might need to woo for some sort of tax vote.

A persistent rumor we didn't mention: Brown will announce his proposals before the Legislature adjourns on Sept. 9. Several labor sources said that they believed the governor might even try to ram through public pension legislation before the session ends next week. Here's how the administration shot that down:

We've heard back from Michael Lee Madsen Sr., a political activist who has received the secretary of state's permission to collect signatures for a pension fund investment initiative.

Here's the email we sent Wednesday followed by the unedited reply we received from Madsen on Thursday. We're publishing it with Madsen's permission:

After we posted "Central Valley TV show looks at public pensions" on Wednesday, Blog User S made us aware of more entries of "The Maddy Report" that discuss the same topic.

Host Mark Keppler interviews Jason Sisney of the Legislative Analyst's Office in the first two segments. The third installment features Allan Clark, president of the California School Employees Association, and Marcia Fritz, president of California Foundation for Fiscal Responsibility.

Fresno-based TV show "The Maddy Report" has posted several segments about public employee pensions that look at the issue from various perspectives.

Host Mark Keppler interviewed Democratic and labor strategist Steve Maviglio; Paul McIntosh, the Executive Director of the California State Association of Counties; Bee columnist Dan Walters ; Robert Price, editorial page editor for the Bakersfield Californian; and your humble blogger. The show airs on Fresno's NBC affiliate, KSEE 24.

"The The Maddy Report" is produced by The Maddy Institute at California State University, Fresno. The think tank is named for former Republican Assemblyman and Sen. Ken Maddy, who died in 2000.

Click the viewers that follow to watch the segments, which run up to six minutes each. The shows were taped in May.

Capitol Matrix Consulting's Mike Genest has come under some harsh criticism from public labor unions for receiving a six-figure pension while arguing for public pension roll backs.

His firm made a splash with a report commissioned by the California Foundation for Fiscal Responsibility that concludes public employees' pay and beneifts packages are generally better than those in the private sector. A third installment of the study issued last week concludes that changing the system -- lowering benefits, shifting more of the cost to employees and the like -- would potentially save government billions of dollars over time.

Genest, who retired from state service as finance director for Gov. Arnold Schwarzenegger, receives an annual pension of about $125,000 per year. In a Monday e-mail to The State Worker, he explained why he advocates remaking a retirement system from which he has benefited. We're publishing that e-mail here, unedited and with Genest's permission:

Editor's note, Aug. 14: A broken link to Brad Williams' response to CalPERS' and CalSTRS has been repaired.

The tension over pensions continued today with the authors of the just-completed "California Public Sector Retirement Programs and Compensation" defending their study after unions and the state's two biggest pension funds all criticized it.

In May, after Capitol Matrix Consulting and the California Foundation for Fiscal Responsibility released the first two parts of their report, CalPERS and CalSTRS took aim at it. Those harsh criticisms resurfaced this week in an e-mail blast issued by union coalition Californians for Retirement Security on Thursday.

"It's no surprise that such a sensitive issue would elicit such over heated rhetoric," said former state Finance Director and Capitol Matrix partner Mike Genest (left). "However, if you look at what CalSTRS and CalPERS actually say about the report, you will see that they do not make any substantive claims that fundamentally attack its conclusions and findings."

Click here to see what CalPERS said.
This link opens the CalSTRS reaction.
Clicking here will download the response by the report's principle author and Capitol Matrix partner Brad Williams.

PHOTO: Mike Genest, former Schwarzenegger finance director listens to a question at a Sacramento Bee and Capital Public radio panel discussion on the state budget on March 23. / Hector Amezcua, Sacramento Bee

A study bankrolled by a Texas billionaire concludes that shifting more contribution costs to employees, switching to a federal-style "hybrid" retirement plan and other changes could save state and local governments billions of dollars each year.

The California Foundation for Fiscal Responsibility received $150,000 from John D. Arnold to pay for the report, according to Bloomberg.

Arnold is a former Enron trader who made his fortune by buying and selling natural gas. Enron, the now-defunct Houston energy company, played a major role in California's energy crisis 11 years ago. Arnold's trades reportedly had little impact on that scandal.

The California Correctional Supervisors Organization is suing to keep a retirement benefit for their members that it alleges the state has illegally eliminated. The organization represents managers and supervisors in the the California Department of Corrections and Rehabilitation.

The lawsuit, which is scheduled for hearing on Sept. 23, says that the state shouldn't have axed the Police Office Fire Fighter II retirement benefit for CCSO members when the Brown administration agreed with CCPOA to end the program. Under the so-called POFF II benefit, which was unique to CCPOA's contract, the state put money equal to about 2 percent of an employee's pay into a 401(k)-type fund.

As of Jan. 31, the plan had nearly 40,000 participants and $479 million in assets, according to CalPERS.

CCSO's lawsuit, filed in June, says that it was illegal for the state to unilaterally yank the benefit from its members. The state says that it gave CCSO a heads up but the organization didn't ask for a meeting to talk it over. And besides, the state says, the budget that lawmakers passed didn't carve out money to continue POFF II for CCSO members.

Click here to read CCSO's petition. This link opens the state's opposing response.

IMAGE: www.yolocourts.ca.gov

Howard Jarvis Taxpayers Association president Jon Coupal made it clear on a radio segment this morning that his group will not be spearheading a campaign to reform pensions.

"Not this cycle, not for 2012," Coupal told Capital Public Radio. "In future years, we may get to that point. But right now, we're not in a position to be the lead organization on pension reform."

Colleague Jon Ortiz recently wrote that one of six reasons a pension reform measure won't appear on next year's ballot is the the lack of a clear leader.

Gov. Jerry Brown and the Democratic majority in the Legislature may come to an agreement on stopping certain abuses of the system, such as spiking and the purchase of airtime. But others are calling for even greater cuts to public sector pension benefits, possibly even for current employees.

Dan Pellissier of California Pension Reform told Capital Public Radio that he still plans to come forward with an initiative.

"We're getting a lot of interest from good, reliable Republican voters and some of the key Republican folks in the state," Pellissier said. "And we are confident that we will have the money to execute our campaign."

PHOTO CREDIT: Jon Coupal listens to a question at a Sacramento Bee and Capital Public Radio panel discussion on the state budget on March 23. (Hector Amezcua / Sacramento Bee).

A proposed initiative that would require the state's public sector pension systems to maintain at least 85 percent of their investments in California-based businesses would weaken returns and fail to spur significant economic activity in the state, according to the Legislative Analyst's Office.

In a report released last week, Legislative Analyst Mac Taylor and state finance director Ana Matosantos wrote that the proposal "most likely" would cause investment returns to fall "because the measure would require a huge concentration of investments in one economic market--California--that is responsible for only about 3 percent of world economic output."

They added, "While this measure is intended to increase economic activity in California, it seems uncertain that it would result in such an increase over the long term."

Michael Lee Madsen, Sr. submitted the initiative at the end of June. The attorney general's office is expected to release a title and summary of the proposal, including the legislative analyst's fiscal commentary, in mid-August. Shortly after that, Madsen could begin the expensive process of collecting signatures to get his idea on the November 2012 ballot.

Madsen defines a "California-based business" as one with at least 70 percent of its workforce in California. The 85 percent investment requirement would kick in Jan. 1, 2016.

As of March 31, CalPERS invested about 9 percent of its $234 billion in assets in California-based companies. Companies elsewhere in the United States accounted for another 31 percent.

PHOTO CREDIT: CalPERS building in downtown Sacramento. (Sacramento Bee/ Jay Mather).

The number of state workers joining the CalPERS retirement roll was almost 40 percent lower in July 2011 compared to July 2010.

Nearly 1,800 workers filed for retirement last July, the largest spike in recent years in any month other than January. This year, 1,072 state employees filed for service retirement between June 16 and July 15.

CalPERS counts new retirement data from mid-month to mid-month, so many January retirees are people who retire just before the new calendar year and many July retirees are people who retire just before the new fiscal year.

Overall, the latest figures mean 6,975 former state workers have started collecting pensions through the first seven months of 2011. By this point last year, there were 7,660 new retirees on board. Across all of CalPERS, including local public sector workers, there have been more than 1,400 fewer retirements.

We reported on the June numbers yesterday. The full data table from CalPERS can be found here.

The chart below shows the overall increase in retirements among the state workforce in recent years as furloughs and other budget cutbacks merged with a large number of baby boomers beginning to hit retirement age.

Anti-tax advocate Ted Costa is back at it. His latest target: pensions.

He has proposed an initiative, written by Robert Matteoli, is called the Pension Solvency Act. It would significantly scale back benefits for current and new employees, give the state controller broad authority to audit the state's pension systems and orchestrate the creation of CalSPERS -- a pension system for the state's private sector employers.

"We want an opportunity to show everyone around this state what real reform is," Costa said. "I don't like the idea of shutting down the pension system. For better or worse, we have this. Let's put it back together."

We never get all of what we learn into a news story, but this blog can give users the data, the notes and the quotes from the notebook that informed what was published.

Here are a few items that informed our story in today's Bee, "Pension extension via 'airtime' becomes political target."

The CalPERS backgrounder on additional retirement service credit.

Assembly Bill 719, which authorized airtime purchases.

Our September 2010 blog post on the fund's airtime price hike.

Blog User E flagged an interesting Twitter tête à tête between Democrat Sen. Ted Lieu and Steve Maviglio, who often speaks for the public employee coalition Californians for Retirement Security.

Lieu tweeted on Friday that lawmakers need to do more about changing pensions or public employees will face even harsher measures via a statewide ballot initiative.

Maviglio responded that the public "(rightly) cares about spiking, abuse, high $" pensions and that unions support laws to tamp that down. But going further would be an "attack on middle class, cops, teachers, firefighters that voters won't support."

Click here to see the Tweet-off.

PHOTOS: Steve Maviglio (top) and Ted Lieu / Sacramento Bee file photos.

From The Bee's Dale Kasler :

California's two pension funds reported their biggest investment gains in years today as they continue to climb out of the hole caused by the market crash of 2008.

CalSTRS said it earned 23.1 percent, its highest in 25 years, in the fiscal year that ended June 30.

CalPERS did nearly as well, posting a 20.65 percent gain. That was its best in 14 years.

Click here for the rest of Dale's story.

IMAGE: www.freefoto.com

A non-profit policy institute out of Kansas says that the U.S. Constitution does not prevent a state from rolling back pension benefits for current employees.

A 20-page paper issued by CalPERS yesterday said both the U.S. and California constitutions bar the state from taking away something that's promised in a contract. The Kansas Policy Institute in a four-page brief released earlier this month said the state can use its police power to overcome that protection if it serves a legitimate public purpose, such as getting the state out of financial trouble.

Relying on the U.S. Supreme Court cases of Energy Reserves Group v. Kansas Power & Light and United States Trust Company of New York v. New Jersey, the institute sums up the theory to say:

A state may impair a contractual right if it has a significant and legitimate public purpose such as remedying a broad and general social or economic problem, such as elimination of unforeseen windfall profits. A state may do so as an exercise of its police power. A contractual impairment may be constitutional if it is reasonable and necessary to serve an important public purpose.

Read the full document below.

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Here's a reference to bookmark when you're debating public pension reform.

CalPERS has just issued a 20-page paper (embedded at the end of this post) that lays out several legal reasons that pension promises made to current employees and retirees can't be altered.

"Vested Rights of CalPERS Members: Protecting the pension promises made to public employees" says, "This paper is not intended to respond to any particular proposed legislation or initiative." Still, it's hard to imagine it would have been written without suggestions by The Little Hoover Commission and others that state and local governments should roll back pensions for existing employees, dump guaranteed retirement payouts and put more of the pension burden on workers.

The CalPERS paper says that the California Public Employees' Retirement Law, the state constitution and the U.S. Constitution all prevent altering pensions promised to current employees. It also details a list of "non-vested" rights that can be altered, such as the price of service credit.

PHOTO: CalPERS headquarters in Sacramento, Sacramento Bee file

Looking to highlight the impact public employee pensions have on the state's economy, an association of 31,000 retired state employees is turning to thousands of little blue stickers.

The California State Employees Association Retirees plans to distribute 100,000 stickers that say "Paid By State Retiree" for its members to affix to checks, bills and other paper forms of payment to state merchants.

"We have always known that the retirement incomes of our members help strengthen the economy wherever they may live," Roger Marxen, president of CSEA Retirees, said in a statement. "These stickers are a friendly reminder that state retirees are your tax-paying neighbors who are not to blame for the state's budget woes. In fact, state retirees help strengthen our economy."

A group looking to abolish collective bargaining rights for all of California's public sector employees filed three proposed ballot initiatives this week that would hit the pocketbooks of state and local government workers.

Whether California Center for Public Policy, led by UC Santa Barbara economics lecturer Lanny Ebenstein (right), can raise enough money to put the proposals before voters is unclear.

The center released a report last year concluding that voters need a chance to resolve California's persistent fiscal problems by cutting government workers' compensation rather than raising taxes and eliminating services.

"Government does not exist to provide compensation and pensions for government workers," Ebenstein said in a news release. "Government exists to provide good public services at a reasonable cost."

He said he filed the three initiatives Tuesday with the state attorney general's office.

We never get all of what we learn into a news story, but this blog can give users the data, the notes and the quotes from the notebook that informed what was published.

Our story in today's Bee touches on pension changes around the nation and at the state and local government level in California.

Here's a table that shows pension reworkings instituted or proposed in cities and counties around the Golden State as of July 4. CalPERS did the research.
California local government pension changes (as of July 4, 2011)

Measures to end pension spiking, reduce gift limits for the state pension funds' employees and shut the pension funds' "revolving doors" now sit in the Legislature's appropriations committees, facing a major test they before they can reach Gov. Jerry Brown's desk.

The bills have received bipartisan support through the Legislature so far, but two bills could be held in the Assembly Appropriations Committee and one in the Senate's fiscal committee because of the measures' sponsor and their potential costs to the state.

Controller John Chiang sponsored the two of three bills and is a strong supporter of the other. After Chiang decided to dock legislators' pay for failing to pass a budget on-time, six of the 12 other measures he sponsored have met their demise one way or another. Authors of the pension-related reform measures say they don't want to see their measures get caught up in the backlash and will keep pushing for them.

The committees also could choose in late August to place the bills on their respective suspense files, citing high enforcement or implementation costs, effectively killing the bills for this year.

Senate President Pro Tem Darrell Steinberg shed some light this morning on the sort of changes to the state pension system that majority Democrats might pursue in the coming year.

"We are going to work in a bicameral fashion to ... come up with what we think is a very strong package," Steinberg said in an interview with The Bee Capitol Bureau.

The Sacramento Democrat said he and his Democratic colleagues "would have been prepared to approve a package negotiated by the governor with the Republicans" as part of an agreement to hold a special election on taxes, but now that those efforts have failed he said his caucus is now preparing to move forward with their own reforms.

"What we put forward has to be strong, it has to be real, but it doesn't have to be what those who have an ideological agenda would demand as part of a negotiated solution," he said.

Steinberg pointed to Gov. Jerry Brown's proposals to eliminate purchase of air time, prohibit so-called pension holidays and retroactive pension increases and ban payment of pension benefits to employees who are convicted of a felony related to their job as "obvious" starting blocks for the package.

While Steinberg said he is "open" to discuss how to implement a pension cap or a 401k-style hybrid system for new employees "on a purely voluntary basis," he said he would not support altering future benefits of existing employees.

"I think they're vested rights," he said.

Steinberg said whether he will seek to put pension fixes on the ballot as part of a Democratic-sponsored signature initiative related to revenues or make changes legislatively is one of several "open questions" remaining as they work to put together a package.

"We're going to do things that are strong but that are done by majority vote," he said.

Four state Senate Republicans have introduced a long-shot resolution aimed at putting a ballot measure before voters that would make sweeping changes to public pensions in California.

Senate Constitutional Amendment 13, would alter everything from how much current and future employees pay toward their retirement accounts to banning retroactive pension increases.

Republican Sens. Tom Berryhill of Oakdale, Anthony Cannella of Ceres, Bill Emmerson of Hemet and Tom Harman of Huntington Beach introduced the resolution on Tuesday.

Its provisions would apply to all state and local pension systems in the California on and after July 1, 2012, and to employees hired on or after that same date. (A few would affect current employees, too.)

The bill faces some high political and legal barriers. The resolution needs support from two-thirds of both Democrat-controlled chambers of the Legislature.

In the unlikely event that all that happens, the political campaign leading up to the vote would be an advertising atomic war. If voters passed the measure, a string of union-backed lawsuits likely would follow. That would suspend the amendment's implementation while a court battle would drag on, probably for years.

Some of the measure's provisions were on the list of pension changes that Brown said he'd horse trade to get GOP support for his budget plan. After Republicans refused to compromise on taxes to balance the budget, the governor said this week that pension reform was "tabled."

But let's assume for the moment that the resolution gets on the ballot in its current form, and California voters get a crack at it. What would they be voting on? Here are some of the provisions:

Californians for Retirement Security has blasted a new study that estimates public pension obligations will cost American households nearly $1,400 per year for the next 30 years. (We told you about the study in this Thursday post.)

The union coalition e-mailed a response to The State Worker this morning that we're posting here, unedited:

Friday, June 24, 2011
To: Jon Ortiz, Sacramento Bee
From: Californians for Retirement Security
Re: CRS response to Rauh Novy-Marx Study

Here is a response from Dave Low, Chairman of Californians for Retirement Security, to the questionable projections in the Joshua Rauh and Robert Novy-Marx Study referenced in the State Worker Blog:

"This new study is based on unrealistic assumptions about the growth of the economy and questionable projections about public pension funds. The conclusion that a tax increase is needed to pay for pensions is pure fiction, and amounts to nothing more than a cheap scare tactic. There is no requirement that pensions be funded at 80 percent, and there is no requirement or financial argument that funds must be raised to pay any additional contribution this year. Pension funded status is not a static number, it fluctuates with the market, demographics, benefits and employee and employer contribution levels."

Meanwhile, Keith Brainard, of the National Association of State Retirement Administrators, also takes the study to task. http://www.nasra.org/resources/RauhResponseFinal.pdf. According to Brainard: "By vastly underestimating states' projected future contributions to their pension plans and their expected investment returns, the paper draws dramatic and improbable conclusions regarding the plans' solvency. The paper further ignores reforms already underway in the states that will restore sustainability to a far greater degree, and with far fewer costs and disruptions, than those proffered in the paper."

Well, here's another one.

A new study from the Kellogg School of Management at Northwestern University and the Simon School of Business predicts that American households will have to contribute an average of $1,398 per year to fulfill public pension promises.

Click here for "The Revenue Demands of Public Employee Pension Promises," co-authored by Joshua Rauh of the Kellogg School and Robert Novy-Marx of the University of Rochester. Rauh and Novy-Marx calculate the increases in state and local pension contributions that would be required to achieve full funding of state and local pension systems in the U.S. over the next 30 years.

The study also looks at what would happen if newly-hired employees were put into defined contribution plans and concluded the shift would reduce the per-household annual contribution to $1,223, or by about $175. In states with large numbers of workers outside the Social Security system, the savings is limited by the likelihood that those governments would have to start paying into Social Security and bearing most of the costs themselves.

The study's authors also looked at what would happen if new and existing workers were shifted into DC accounts. Under that controversial option, no earned benefits including cost-of-living adjustments are revoked, but defined benefit pensions stop growing with service and salary. Future contributions are placed into DC accounts. The DB-to-DC switch has been common in the private sector for decades, but would face an uphill legal battle if implemented in the public sector.

An across-the-board pension plan shift for new and current workers would reduce the average household contribution to about $800, Rauh and Novy-Marx figure, but even freezing all benefits at today's levels won't fix the unfunded liabilities that still need to be paid off.

Rauh and Novey-Marx have written plenty about pensions. (Here's another example of their work.) The New York Times briefly referenced the study in a pension story that ran earlier this week.

A story in the New York Times quotes CalPERS board member Tony Oliveira and former fund chief actuary Ron Seeling on public employee pension enhancements approved more than a decade ago. The story also delves into the union's strategy a few years ago to bump up benefits for their members at the local level and the current debate over pension benefits.

No doubt that this story and its accompanying graphics will be grist for the pension debate mill. A few passages give a sense of the story's angle:

Last week this blog posted a public pension defense video by two labor groups, California Professional Firefighters and Californians for Retirement Security, that blasted pension reform proponent Marcia Fritz for using the phrase "tantamount to fiscal child abuse" during an Assembly committee hearing.

"The last place you want a benefit decision like this that impacts future generations, it's tantamount to fiscal child abuse, is what we've done," Fritz says in a California Channel video snippet of her May testimony.

Then the union video unloads on Fritz, who has become a prominent figure in the pension reform movement as president of the Citrus Heights-based California Foundation for Fiscal Responsibility. (If you're not familiar with the foundation, this link opens up more than two dozen State Worker blog posts that mention the group.)

"Anyone in the public eye should not be demeaning the plight of victims. It goes against nature, what I see, wherein parents are inflicting violence and sexual abuse on chidren. and to compare that to a fiscal system, it's appalling," says Sarah Taylor, a social worker with Child Protective Services.

"For Marcia to use that type of language just sort of shows, A, what type of person she is," says Dave Low, chairman of Californians for Retirement Security, "and, B, what the real agenda here is. It's not to have a real dialogue about the issue, but it's just to inflame people's anger."

Fritz sent the following statement to The State Worker late Monday to rebut criticism of her remark. We're publishing her email here with her permission:

I testified on AB 961 (Mansoor), which would have prohibited collective bargaining for pension benefits. Teachers don't collectively bargain pension benefits, so how could THEY be offended by what I said and why were they even on the ad? Furthermore, nothing in my testimony was critical of labor in particular. I mentioned managers, labor negotiators, pension systems, and governing boards who all gain when benefit increases are granted to workers during collective bargaining. These decisions were harmful, improper, and abusive to our children who received nothing in return for the price they will be required to pay both in $ and in lower services.

Marcia Fritz, CPA
President
California Foundation for Fiscal Responsibility

Click here for more information on AB 961, which failed to get out of the Assembly Committee on Public Employees, Retirement and Social Security.

IMAGE: Marcia Fritz testifies on Assembly Bill 961 before the Assembly Committee on Public Employees, Retirement and Social Security, May 4. Still image captured from California Channel video.

California Professional Firefighters and Californians for Retirement Security have released a new five-minute video that defends the public pension status quo. Via interviews with firefighters, retired teachers and others, the unions continue to juxtapose broad pension policy proposals to reduce public employee retirement benefits in California with real people depending on public pensions or anticipating them.

"The sad thing is, it's not just that they're attacking me, they're attacking everyone I work with," Los Angeles County firefighter Andy Doyle says in the video. "They're attacking the teachers that taught my children in school. They're attacking the janitors that clean the buildings. They're attacking public employees."

The video also takes pension reform crusader Marcia Fritz to task for calling unfunded pension liabilities "tantamount to fiscal child abuse" during testimony before an Assembly committee earlier this year.

Watch the video, then take our poll:

Dave Low, chairman of the union-backed Californians for Retirement Security, on Monday criticized Republicans for stalling an agreement on the state budget to advance proposals he said remain "non-starters" for his group.

In response to Monday's release of a list of pension, regulatory and spending reforms sought by a group of four Republican senators, Low said in a statement it was unconscionable for a few Republicans to push a "pension-gutting agenda" while "holding the state budget hostage." The Legislature faces a Wednesday deadline to pass a balanced budget.

Specifically, Low said later in an interview that the union coalition continues to oppose mandatory hybrid plans for new hires. If Democrats adopted that idea and the other pension changes that the Republicans want, his group would spend money to defeat the ballot measure carrying the reform, he said.

"We shouldn't strike a horrible deal for a temporary tax extension," Low said. "It's simply a non-starter. The Republicans completely ignore all the concessions that have already been made by public employees up and down this state."

Low's group is a union coalition representing 1.5 million public employees and retirees. The group's full statement is below.

"Public Employees unequivocally support fair efforts to clamp down on pension fraud and abuse. Overall, California public employees' contributions to their pensions have climbed from 5 percent to 7 to up to 11 percent, formulas for calculating pensions have been reduced and stringent new rules are being established to eliminate abuses such as spiking. In all, these changes - made through collective bargaining - have reduced state pension costs by $570 million over the past two years.

We find it unconscionable that a handful of Republican extremists are holding the state budget hostage only to advance their pension-gutting agenda. Even though public employee pensions amount to just three percent of California's state budget, we will continue to work with the Governor and Legislature and support changes in the pension system to root out abuse. But we will absolutely oppose efforts to gut retirement security for firefighters, teachers, school employees, police and other public employees."

Four of the Senate Republicans engaged in budget negotiations with Gov. Jerry Brown today released the most-detailed look yet at how they propose to overhaul public employee pensions.

Republicans said the pension demands, along with a spending cap, and changes to environmental and other regulations, would go before voters at the same time as tax increase extensions sought by Brown and represent the "necessary components of any successful bipartisan budget solution."

New hires would be offered hybrid plans that combine a "smaller" defined-benefit component split equally between the employee and the employer and a 401(k)-style defined contribution plan. New employees also could opt-out of the hybrid and choose to have only a defined contribution plan.

The Republicans said that one of their goals is to "provide employees with a sensible retirement plan that is more in line with the private sector and achieves about 75 percent salary replacement after taking into consideration social security benefits."

The Brown administration previously has signaled support for some of the ideas. They include stopping both pension holidays and retroactive pension increases, banning the purchase of retirement credit for work that hasn't been performed ("airtime") and capping benefits at $106,000 for those participating in social security and $119,000 for those that aren't.

Several changes the GOP laid out are included in bills pending before the Legislature. Those would ban pension spiking, where employers could consider overtime and unused leave into final compensation calculations, and double dipping, where employees could retire, start collecting a pension and then return to the same employer on a fresh salary.

Republicans also want new hires to pay about half of their health care costs during retirement. The GOP plan also calls for two-thirds of the membership of pension boards to have financial, legal accounting or health care expertise. The boards would be required to follow the recommendations of independent plan actuaries.

Other highlights:

Pension Spiking - Average Salary: Final compensation for new employees would be defined as the highest average annual compensation during a consecutive 60-month period.

Reduces Unfunded Liabilities: Require current employees to contribute more of their salaries towards reducing unfunded pension liabilities, and they will pay more for health care costs both during employment and post-retirement (could be done through Collective Bargaining). Future employees will be required to pay more for their health care.

Vesting: Change from partial at 10 years and full at 20 years to partial at 15 years and full at 25 years.

Applicability: Applies to all California public employers - state, local, special districts University of California and the California State Teacher's Retirement System (do we need to include STRS?).

110613_ReformProposalSpecifics

Fewer state workers applied for service retirement in May than a year ago, the latest CalPERS data shows, marking the third month this year that the rate has declined.

The numbers show that 822 state workers put in their paperwork between April 16 and May 15, down roughly 6 percent from the same period 2010.

So far, 5,093 state employees have entered retirement in 2011, compared to 4,999 who retired between January and May of 2010.

Although the year-over-year May and year-to-date numbers show slight change from 2010, they are still significantly higher than the same periods for 2007, 2008 and 2009, reflecting in miniature how the demographics of the aging workforce continue to impact the rate at which state workers are leaving.

For example, 3,192 state workers retired from January through May 2007 (which is as far back as the CalPERS data tracks) and just 7,778 retired that entire year.

And, as we noted in our State Worker column last week, Gov. Jerry Brown's February hiring freeze has slowed hiring significantly compared with the final months of Republican Arnold Schwarzenegger's administration.

(Of course, the state's use of retired annuitants and outside consultants isn't part of those figures. That's a topic for another day.)

Coincidentally, the rate at which all state and local CalPERS members retired increased a little over 7 percent in May to 2,007, as the data in the first table show. The state-only retirement figures are in the second table.

CalPERS' new retirement data run from mid-month to mid-month. The fund's active and inactive members include 1.1 million state, local and school employees. About a 31 percent of them are state workers. Another 500,000 or so retirees or their survivors receive a monthly allowance.
CalPERS service retirement applications January 2007 through May 2011

Few political figures have drawn as much fire from state workers as David Crane, former Gov. Arnold Schwarzenegger's pension reformer-in-chief who became the face of the administration's push to cut retirement benefits for state new hires and increase oversight of CalPERS.

So what he wrote this in last week's Contra Costa Times might come as a surprise:

Former Assemblyman Roger Niello's initiative to rollback public pension benefits "will end up in the scrapheap of politically-motivated failures," said Dave Low, chairman of Californians for Retirement Security, in a statement released by the union coalition Tuesday evening.

As reported by Bee colleague Paresh Dave on Tuesday, Niello has decided he won't pursue collecting signatures to put his public pension rollback initiative on the ballot, although the secretary of state has said that he can begin working to place it before voters.

Niello, a Fair Oaks Republican who has said he's considering a run at statewide office, said with a special election on taxes later this year looking more and more remote, there's no urgency to make sure "pension reform" goes up for a vote.

The union coalition followed the news with a statement from Low that hit The State Worker's e-mail inbox at 9:01 p.m. Tuesday night:

It is appropriate that the flawed Niello initiative to gut retirement security for millions of Californians will end up in the scrapheap of politically-motivated failures instead of on the ballot. It was a poorly drafted attempt to punish middle-class workers and it ignored the fact that workers have agreed to substantial reductions in retirement benefits and have increased their contributions towards pensions from 5 to 10 percent. We continue to believe the way to improve the state's pension system is at the bargaining table, not the ballot box.

Imagine what Low will say if backers of a pension rollback plan actually start collecting signatures or if a measure actually gets on the ballot. (Niello says he might tweak his plan for a vote next year.)

PHOTO: Dave Low / Sacramento Bee file

With just 400 to 450 words for our weekly State Worker column, most of what we learn each week never sees print. Column Extras give you some of the notes, the quotes and the observations that inform what's published.

Our column in today's Bee notes that the state's employer pension contribution for fiscal 2011-12 will run about $410 million less that it would have been without the higher employee contributions negotiated first by former Gov. Arnold Schwarzenegger and then continued in contract agreements negotiated by Gov. Jerry Brown.

What follows are CalPERS' actuarial estimates that show the exact figures. Note: The report was printed before Gov. Jerry Brown signed the measure with the last six contracts into law this week, so the third column, "With Increase in Member Contributions for All Agreements (Includes those not Ratified Yet)" actually includes the estimates of those newly-ratified deals:

CalPERS says a report issued last week that questions the sustainability of defined-benefit public pensions is "flawed" and that various fixes it considers are either inequitable or illegal.

The fund is firing back at "Comparing Public and Private Employee Compensation and Retirement Benefits in California," commissioned by the California Foundation for Fiscal Responsibility, a pension-change advocacy organization based in Citrus Heights.

The study by Capitol Matrix Consulting, a firm co-founded by former state Finance Department Director Mike Genest, says that California's state and local government employees' pay is roughly equal to counterparts' salaries in the private sector, but pension and health benefits push public workers' total compensation costs about 10 percent higher.

It considers several options proposed by the foundation to close that gap, such as eliminating health benefits for spouses and dependents of retirees when a retiree turns 65 .

CalPERS says the report makes flawed assumptions, uses flawed methods, lacks specifics and takes a race-to-the-bottom, anti-pension posture. The fund's reply is embedded below and was just posted on the CalPERS Responds website.
CalPERS' Key Observations of CFFR Study

Is former Gov. Arnold Schwarzenegger's chief pension change advocate getting smeared by the unions? He thinks so.

David Crane, who was an economic adviser and big-time pension system critic in the Schwarzenegger administration, tells The State Worker that it's "painfully ironic" that he has been taken to task as a public employee basher.

That charge is among several outlined on DontScapegoatUs.com, a Californians for Secure Retirement website that skewers Crane and several other public figures (sporting digitized goat horns) who have called for changes to the system. Crane is referred to as the "Scapegoater-in-Chief."

Here's the rest of what Crane's emailed rebuttal, sent via Aaron McLear, Schwarzenegger's former press secretary. (McLear recently launched a Sacramento-based communications consulting firm, the Ginsberg McLear Group, with Josh Ginsberg, Schwarzenegger's political director.)

California's state and local government employees' pay is roughly equal to counterparts' salaries in the private sector, but pension and health benefits push public workers' total compensation costs about 10 percent higher, a new report says.

The two-part study, commissioned by the California Foundation for Fiscal Responsibility , also cautions that public pension obligations threaten to crowd out money for public services. The foundation, headed by long-time pension change advocate Marcia Fritz, has proposed several pension cost-cutting ideas including a cap on pension payouts, higher employee contributions and higher retiree health premiums. The proposals would affect both current workers and future hires.

The study by Sacramento-based Capitol Matrix Consulting estimates the impact of those proposals on various employees based on length of service and whether they are safety or miscellaneous workers. Nearly every scenario envisions deep cuts to employee benefits and employer costs.

Steve Maviglio, spokesman for union coalition Californians for Secure Retirement, blasted the report, its authors and the foundation. "The report is a political document that relies on outdated and skewed data that provides an inaccurate view of retirement benefits for public employees," he said this morning in an e-mail.

CalPERS CEO Anne Stausboll issued a statement this afternoon that said the fund is reviewing the report, but "what we have seen reported raises significant policy and legal questions. We will closely examine the research, methodology and implications through the lens of our role to provide retirement security and health benefits for our members and their families."

At 3 p.m. today, Californians for Retirement Security will launch a new website designed to put pension reformers on the defensive. DontScapegoatUs.com fixes its criticisms squarely on eight figures (with Photoshopped horns, above) who are leading the battle to change public pensions, including Dan Pellissier, president of California Pension Reform; Marcia Fritz, executive director of the California Foundation for Fiscal Responsibility; and an "anonymous out-of-state billionaire" (represented on the website with an avatar that looks like Playboy publisher Hugh Hefner) who is reportedly backing pension change efforts.

The site delves into the backgrounds and connections of the pro-pension-change players, cites various pension facts and quotes from news stories that support the pension status quo.

The State Worker got a sneak preview of the website, which won't be launched until 3 p.m.

DontScapegoatUs.com's Twitter hash tag will be #demongoats.

IMAGE: www.dontscapegoatus.com

The California Statewide Law Enforcement Association's quest to apply enhanced pension benefits retroactively died a quiet death last month after the state Supreme Court declined to consider the union's appeal.

The union had asked the court to review the decision of Sacramento's Third District Court of Appeal, which had ruled that the negotiated safety retirement benefits for Bargaining Unit 7 didn't apply to service prior to July 1, 2004.

The high court's April 27 declination ends a long battle over the benefit between CSLEA and the Department of Personnel Administration. Click here for more history on the case. This link opens the court's calendar of events in CSLEA v. DPA.

IMAGE: www.yolocourts.ca.gov

The California Public Employees' Retirement System wants to sign up retired members to help it build support for defined-benefit public pensions via the fund's new "ambassador program," which launches in a little more than three weeks.

The idea, according to this California State Employees Association website announcement, is to "identify individual stakeholders and build relationships to support the mutual goal of maintaining retirement security in California."

CalPERS is hosting the inaugrual ambassadors' meeting on May 26 from 1:30 p.m. to 4 p.m. at CalPERS headquarters, Lincoln Plaza North 1170.

Rachel Pitts, spokeswoman for the Retired Public Employees Association , said today that fund CEO Anne Stausboll will address the ambassadors' meeting, communications experts will talk about how to discuss pension policy and that CalPERS actuaries will make a presentation about the fund's finances.

The goal, Pitts said, is to get at least 30 people to attend the kickoff meeting.

On a related note, your humble blogger spent a few hours today with RPEA members as they lobbied lawmakers at the Capitol. (That's where we heard about the ambassador's program.) We're planning to write more about the experience for our Thursday State Worker column.

The rate at which state workers drew their first pension checks in the first four months of this year slowed dramatically compared with the same period in 2010, according to CalPERS most recent data.

Some 4,271 state employees put in their retirement applications between Dec. 15 of last year and April 15 of this year (which CalPERS considers the January through April period), up just 3.6 percent from a year earlier. By contrast, the retirement rate for those same four months jumped 26.5 percent from 2009 to 2010.

Last year was perhaps the most tumultuous period for California's state work force since union organization was established during Gov. Jerry Brown's first administration more than 30 years ago. Furloughs, minimum wage threats, contentious labor negotiations, layoff warnings and epic court and public relations fights with Gov. Arnold Schwarzenegger damaged morale and no doubt prodded many state workers to retire who might have stayed under less contentious circumstances.

The number of state workers who retired in March fell slightly compared to the same month in 2010, while April saw a slight year-over-year increase of first-time pensioners.

The overall upward retirement trend will continue as more and more baby boomers in the state work force grow old enough to retire. But the data also suggest that state workers aren't going to continue an all-out stampede for the exits, a likely bi-product of the relative labor peace under the new Brown administration and the weak prospect for post-retirement jobs in the private sector.

California public pension funds had a combined $490 billion in obligations in fiscal 2008-09 and enough assets on hand to cover 81 percent of those promises, according to a new report.

But the state's overall public employee retiree health care liabilities reached $66.6 billion with virtually no money set aside for those future obligations, according to the survey by Pew Center on the States.

"The Widening Gap: The Great Recession's Impact on State Pension and Retiree Health Care Costs" also says that California should have paid $12.4 billion into its public retirement funds that year but paid only about 82 percent of that.

The Pew analysis drew immediate criticism from unions and researchers who support defined benefit public pensions for using outdated figures that include the nadir of the national financial crisis, the September 2008 banking crisis and stock market meltdown.

State and local government retirement systems had nearly $3 trillion in assets at the end of last year, according to a brief released this month by the National Association of State Retirement Administrators and the National Council on Teacher Retirement. That was a 35 percent increase since the funds collectively bottomed out at the end of March 2009.

A joint press release by the two pro-defined benefits organizations says that "recent plan redesign efforts underway in virtually every state" and higher median returns of about 13 percent in 2010, help explain the increase.

The release quotes a blast from Keith Brainard, NASRA's research director, aimed at public pension critics who use older numbers: "Discussions of pension funding should use these more recent figures instead of depressed asset values that are no longer accurate. Out-of-date numbers create misleading impressions about the true financial condition of public pension plans and their state and local government sponsors."

Data cherry picking was one criticism that Treasurer Bill Lockyer leveled last month at the controversial Little Hoover Commission pension report.Strong Investment Gains and Legislative Changes Speeding Public Pension Recovery

Editor's note, 1:54 p.m.: An earlier version of this post published the wrong response from Californians for Health Care and Retirement Security.

We never get all of what we learn into a news story, but this blog can give users the notes and quotes from the notebook that informed what was published.

Our story in today's Bee samples reaction and analysis from several different sources about Gov. Jerry Brown's pension plan. Here are two press releases with different takes on his proposal:

***Media Release***

By Dave Low, Chairman of Californians for Health Care and Retirement Security

Californians for Health Care and Retirement Security Assail Brown's Pension Proposals
April 01, 2011 @ 9:45 AM
California's public employees agreed in good faith to significant concessions at the bargaining table that have saved state government hundreds of millions of dollars. We have marched side by side with lawmakers to try to help repair an economy crippled by Wall Street greed. We have made concession after concession - from slashed paychecks disguised as furlough days to uncertainty in the form of pink slips delivered to those who teach our children. A bipartisan agreement on pensions last year saved state government $400 million. Hundreds of local governments already have reduced pensions for new hires through collective bargaining.

Now, Gov. Jerry Brown is proposing that we agree to more cuts. These unilateral changes fly in the face of collective bargaining law and amount to a breach of agreements that state government has made with millions of workers in California. California's policymakers need to take a careful look at the billions of dollars in tax breaks for the wealthy in our state budget before they launch an assault on California's middle class. It is time for our elected officials to start standing up to corporate interests and right-wing factions who are part of a national attack on public workers and their retirement security.

We have been steadfast in our support of changes to clamp down on egregious abuses of the pension system that are the exception. The average public pension in California is $26,000 a year. Half of CalPERS retirees receive $18,000 per year or less. Given the facts, Californians will not tolerate policymakers who do not keep their word to the people working in the trenches to serve, protect and teach our families

Californians for Health Care and Retirement Security is a coalition of 1.5 million public employees and retirees.

From Senate Republican Leader Bob Dutton:

Gov. Jerry Brown today issued a 12-point pension reform agenda his office says he will introduce in the Legislature "with or without Republican support."

The first seven items seek to end abuses or tighten pension funding rules. The last five involve more systemic changes and are listed as "under development." We have a call in to the governor's office to find out what that means.

Brown released the details two days after talks broke down with Republican lawmakers over the state budget deficit. The GOP was seeking pension changes, among other things, in exchange for votes to place tax increase extensions before voters

Here's a summary from Brown's office, followed by proposed bill language:

PENSION REFORM PROPOSAL

APPLIES TO STATE AND LOCAL GOVERNMENTS

MARCH 2011

1. Eliminate Purchase of Airtime. Would eliminate the opportunity, for all current and future employee members of all state and local retirement systems, to purchase additional retirement service credit. (RN 14777) (Note Walters, SB 522, would eliminate Air Time)

2. Prohibit Pension Holidays. All California public agencies would be prohibited from suspending employer and/or employee contributions necessary to fund the normal cost of pension benefits. (RN 14777)

3. Prohibit Employers from Making Employee Pension Contributions. All California public agencies would be prohibited from making employee contributions that fund the normal cost of employee retirement benefits in whole or in part. (RN 14777)

4. Prohibit Retroactive Pension Increases. All California public agencies would be prohibited from granting any retroactive pension benefit increases, such as benefit formula improvements that credit prior service. (RN 14777)

5. Prohibit Pension Spiking: Three Year Final Compensation. Final compensation for new employees would be defined as the highest average annual compensation during a consecutive 36 month period. (RN 14777)

6. Prohibit Pension Spiking: Define Compensation as Only Regular, Non-recurring Pay. Compensation means normal rate of pay or base pay. (RN 14777) (Note Simitian, SB 27, would exclude from defined benefit changes in compensation principally for the purpose of enhancing benefits; would place stricter limits on creditable compensation)

7. Felony Convictions. Prohibits payment of pension benefits to those who commits a felony related to their employment. (RN 14777) (• Note Strickland, SB 115, similar prohibition)

PROPOSALS UNDER DEVELOPMENT

Impose Pension Benefit Cap.

Improve Retirement Board Governance

Limit Post-Retirement Public Employment

Hybrid Option

Address CalSTRS Unfunded Liability

Gov. Jerry Brown's pension reform proposal

Between 40 and 50 public-sector workers marched in front of Niello BMW in Sacramento on Wednesday morning, chanting, "Take your money somewhere else! Don't shop Niello!"

Labor coalition Californians Californians for Health Care and Retirement Security organized the protest -- and a boycott against all the Niello family auto dealerships -- after former Assemblyman and dealership minority owner Roger Niello filed initial paperwork to put a public pension rollback measure before voters. Niello is also considering a run for either the state Senate or a statewide office.

Niello's family owns and operates the BMW dealership and a dozen other auto retailers in the Sacramento region. The company released a statement that noted Roger Niello's minority stake in the company and said he isn't active in its business operations. The company said it doesn't take positions on political issues.

VIDEO: Union members protest at Niello BMV on Wednesday. Hector Amezcua / Sacramento Bee

Former GOP Assemblyman Roger Niello, who made a splash last week with a public employee pension reform proposal, told Capitol Alert blogger Torey Van Oot that he's eying running for statewide office or the state Senate.

Click here for more.

Steve Maviglio, spokesman for the union coalition Californians for Health Care and Retirement Security, sent out an e-mail blast this morning drawing from one of the timeless sarcastic quotes in the movie, "Casablanca":

"We're shocked, shocked to hear the news that former State Senator Roger Niello is aspiring to higher office, according to a report in the Sacramento Bee this morning."

The Fair Oaks Republican has yet to represent a district in the upper house. He ran in the 1st Senate District last year and lost in the Republican primary to Ted Gaines, who went on to win the seat.

Brown's Countdown, Day 76: Budget talks deteriorate as GOP unveils big request list
State budget talks between Gov. Jerry Brown and Republican lawmakers deteriorated Friday as Republicans released a long list of proposals to overhaul California government that Democrats said had further divided the parties.

According to a document Senate Republicans provided to reporters, they asked Brown for pension cuts to current and future employees, as well as changes to teacher tenure that reward performance and a hard cap on future state spending, among dozens of ideas.

... The list provided by Republicans included notations of where Brown and Democratic leaders had agreed and disagreed, a rare unveiling that serves as a bad sign for negotiations. (Click here to see the GOP list provided to reporters.)

According to GOP notes, Brown is willing to accept a $106,000 per year cap on final pension amounts and impose new restrictions intended to block workers from spiking their payouts. But he rejected increases in cost-sharing, as well as any move toward a 401(k) style plan, for current employees. He was, however, open to creating a hybrid option for future workers.

Redistricting called cause of state budget impasse
It might sound crazy, but some political insiders think the budget impasse has less to do with anti-tax conservatives than redistricting. "Huh?" you say - well, here's how.

Pensions & Investments, a leading financial publication that closely follows CalPERS, featured an article on Thursday that said the fund is getting a grip on scandals that have embarrassed the organization.

A couple of paragraphs from the P&I piece that comments on the investigation CalPERS commissioned and the board's reaction to it:

CalPERS trustees deserve praise for coming to grips with the dimensions of the problem, dealing with weaknesses, and strengthening structures.

The review doesn't close the case or end the need for further reforms. The pending criminal cases, and investigations by the Securities and Exchange Commission and others, could produce revelations of more abuses that CalPERS trustees will have to address.

But this review helps CalPERS get on track to overseeing the investment of its assets with proper fiduciary care.

So what do you think?

Former Republican Assemblyman Roger Niello has submitted a proposed statewide ballot initiative to the Attorney General's Office, the first step to circulating a petition to put a measure on a November ballot, if an election is called this year.

Niello, who lives in Fair Oaks, has submitted what he's calling the "Public Employee Pension Reform Act," which would:

• Set the retirement age for all California public employees, including current workers in every classification, at age 62.
• Limit retirement benefits for a public agency employee to no more than 60 percent of the highest annual average base wage of the employee over a period of three consecutive years of employment.
• Split the employer/employee contribution to pensions equally.
• Exclude unused leave time from pension calculations.
• Ends retroactive pension increases.

Other than the retirement age change, the other parts of the initiative would apply only to new hires, Niello said in a telephone interview this evening.

The proposal also includes this paragraph:

Public agencies shall retain exclusive authority to modify the terms of pension, retiree health, or other retirement benefits provided to its employees and may not relinquish such authority in any employee contract or collective bargaining agreement.

If voters approved the measure, it would take effect immediately.

Niello said that the pension changes he is proposing are "reasonable," particularly compared with some ideas that have entered the public debate. For example, his plan doesn't switch guaranteed pension payouts for 401(k)-style defined contribution plans or a hybrid system like that outlined in last month's Little Hoover Commission pension report.

Asked whether he was prepared for a fight with public employee unions, Niello said, "This is an approach I'd think that they would find more acceptable, given what some of the alternatives are that are out there."

Niello said that he hopes that Gov. Jerry Brown and GOP lawmakers can forge a pension deal as part of a June special election on whether to extend taxes. If they can't and Brown decides to put a tax measure on a November ballot, Niello wants his initiative to be ready to go.

"It's my preference that they work out a compromise for a June ballot measure," Niello said. "But if they can't, we're planning for every contingency."

Read the proposal here.

Column Extras give State Worker blog users notes, quotes and details that inform our weekly State Worker column. From the notebook items expand on news stories that we write. This week, we're combining both features into one post.

Our news story and The State Worker column both reference findings from a Field Poll on unions and public pensions released to the public this morning. We thought State Worker blog users would like to see the poll tabulations and the Field Research summary of the results.

Click here for the tabulations.
Click here for the Field Poll summary.

State Treasurer Bill Lockyer sent a letter to Daniel Hancock on Tuesday, asking the Little Hoover Commission chairman to reopen a controversial study of California's public pensions that suggests current employees' accrued benefits should be frozen and then lowered going forward.

Lockyer slammed the report last week.

Here's his letter to Hancock:
Lockyer Letter to Little Hoover Commission

PHOTO: State Treasurer Bill Lockyer speaks to a legislative committee in 2009. Hector Amezcua / Sacramento Bee

Here's a surprising finding to toss into the public pension debate: More than three-quarters of private-sector firms recently surveyed said that none or very few of their employees have expressed worries about retirement readiness.

The survey of 429 companies between November and January also found that 42 percent of the employers who had eliminated or reduced their matching contributions to retirement plans aren't changing anything this year. Another 29 percent hadn't decided what they were going to do. The rest, 29 percent, said that they would resume some level of employer contribution this year.

Taken together, you have to wonder how much private sector workers really worry about retirement security. So did the survey researchers for Drinker Biddle LLP, Grant Thornton LLP and Plan Sponsor Advisors LLC.

Studies show many participants surveyed simply do not report to understand what savings balances they will need to retire comfortably. We have experienced a considerable uptick in requests from plan sponsors to assist in communications strategies and retirement readiness programs for their employee populations. The current situation facing participants is that the combination of decreased plan balances, economic uncertainty and regulatory/administrative updates, such as Roth conversions, have significantly increased the number of issues facing participants. However, until they actually face some of these issues, they may not be aware of the critical nature of these challenges.

Government pension change advocates argue that the public is highly aware of the risk and retirement insecurity that goes with defined contribution plans, whereas defined benefit government retirement plans have guaranteed payouts. It's unfair, reformers say, that government workers receive a benefit that has virtually vanished from the private sector -- particularly because tax dollars backstop the retirement guarantees.

But the survey, which you can read here, suggests that many people aren't paying attention. If that's the case, does it mean pension-change advocates don't have the political tailwind needed for a big-time change in public pension policy?

What do you think?

California Treasurer Bill Lockyer has torn into The Little Hoover Commission's controversial report on public pensions, a document he says is "long on rhetoric and short on thoughtful analysis."

That comment leads a six-page thrashing from Lockyer that is posted on the treasurer's website. We've embedded it below:

LHC Pension Report Comments 03-11-11

The Bee's Dale Kasler has reports in this story that CalPERS Board of Administration will consider lowering its investment return expectations from the current 7.75 percent to 7.5 percent. As Dale notes, the change could have significant implications for what the state pays into the fund if the fund's Board of Administration adopts the new rate at its meeting next week.

But there's another impact -- this one for some individual CalPERS members -- in the staff report to the fund's Benefits and Program Administration Committee, which meets on Tuesday:

For service credit purchases under the "present value" method, the use of the new discount rate will apply to all applications postmarked on or after March 17, 2011.

So what does that mean? Higher "air time" costs for members. Here's what the staff analysis concludes:

Note that lowering the discount rate to 7.5% will result in an increase in cost for members to purchase service. The cost for service credit purchases under the present value method is expected to increase between 2% and 5%.

Click here to read the full CalPERS staff report.

Last month's Little Hoover Commission report suggests pension reforms that would end up costing the state more money in the long run -- and that's if they're even legal, the chief executive of California's biggest teachers' pension fund said in a Wednesday letter to the commission.

"(I)mplementing the recommendations made in the report - even if it were possible to do - would likely weaken,rather than strengthen, retirement security for California's public educators," Jack Ehnes, CEO of the California State Teachers' Retirement System, said in a letter sent to Little Hoover Chairman Daniel Hancock. "Given the importance of this issue to literally millions of Californians, it is time to move past the political rhetoric and focus on solutions that are truly responsive to the problems."

Live Video streaming by Ustream

The pro-business Bay Area Council is hosting a panel discussion on public employee pensions today at 8:45 a.m. The panel brings together some of California's most visible advocates on both sides of the ongoing debate:

Jeff Adachi, San Francisco Public Defender
Bob Foster, Mayor of Long Beach
Marcia Fritz, President of the California Foundation for Fiscal Responsibility
Dave Low, Chair of Californians for Health Care and Retirement Security
Joe Nation, Stanford Professor and former State Assemblymember
Harvey Robinson, President of the Retired Public Employees Association of California

University of San Francisco political science professor Corey Cook, director of the Leo T. McCarthy Center for Public Service and the Common Good, will moderate.

The Bay Area Council is streaming the discussion live online, and we've embedded the viewer above so you can watch the event from this site. You can also see it at www.ustream.tv/bayareacouncil

A new study of 126 state retirement systems concludes that their combined ratio of pension assets-to-liabilities, the so-called "funding ratio," rose to 69 percent in 2010, up from 65 percent a year earlier.

Or you can look at it the other way: State pension funds are 31 percent unfunded. Generally speaking, experts consider an 80 percent funding ratio the threshold for a healthy system.

Santa Monica-based Wilshire Consulting published the report, which focuses on pension funds in the aggregate and doesn't break out individual retirement systems. It did include numbers from CalPERS, CalSTRS and the UC retirement system, however.

For folks who get into how funds spread their money around, the investment consulting firm's report gets into asset allocation data.

Wilshire forecasts the plans' long-term median return will be 6.5 percent, which is 1.5 percent below the funds' median actuarial interest rate assumption of 8 percent. The higher the assumed rate, the greater the discount on what government employers pay to the funds.

(Our Capitol Bureau colleague, Kevin Yamamura, explains the different schools of thought when it comes to this key assumption in in today's Bee.)

Here's the Wilshire report:
2011 Wilshire Report on State Retirement Systems: Funding Levels and Asset Allocation

State lawmakers today ranged from skeptical to dismissive of a controversial new proposal to freeze and then lower current public employee pensions.

During a joint meeting this morning of Assembly and Senate committees that oversee public employee compensation, some legislators said the bipartisan Little Hoover Commission's report on state and local public retirement funds added to public debate, but others called its ideas unrealistic and legally suspect.

"Frankly, I just don't see this happening," said Sen. Alex Padilla, D-Los Angeles.

Assemblywoman Fiona Ma, D-San Francisco, noted that public employee pensions currently average less than $30,000 per year. Retirees aren't living the high life, she said, adding that hyperbolic pension reform talk is part of a general "attack" on public employees.

"But not by this commission," said the commission's director, Stuart Drown, who defended the report during 30 minutes of testimony this morning before the Assembly Public Employees, Retirement and Social Security Committee and the Senate Public Employment and Retirement Committee.

The Little Hoover Commission acknowledged the legal questions that surround changing pensions for current public employees. Conventional wisdom holds that it would break the law. "But the commission made a policy analysis, not a legal analysis," Drown said, based on nearly a year's research and testimony from a wide variety of pension experts and interest group representatives.

The 12-member Hoover commission made a splash last week with a 100-page report that suggested public pensions at all levels are overextended. Its solutions included freezing pensions and moving employees into hybrid plans that incorporate a small guaranteed component with a 401(k)-style savings account and Social Security benefits for those employees who aren't now in the federal program.

VIDEO CREDIT: Little Hoover Commission Executive Director Stuart Drown answers questions before a joint legislative hearing Wednesday, March 2, 2011, about the recent Little Hoover report that advises -- among other things -- that the state's state and local governments should roll back pensions for existing employees. Hector Amezcua / Sacramento Bee

The Assembly Public Employees, Retirement and Social Security Committee and the Senate Public Employment and Retirement Committee will hold a joint hearing tomorrow that will include a discussion of last week's Little Hoover Commission report on public employee pensions.

Little Hoover Executive Director Stuart Drown is expected to give a brief statement and then take questions, maybe 15 minutes in all, we've been told.

The hearing will cover more than the Little Hoover report. Among other officials listed on the joint committee's agenda: DPA Director Ron Yank, CalSTRS CEO Jack Ehnes and CalPERS CEO Anne Stausboll. Dave Low, executive director of the Labor Coalition, will also speak.

Click here to open the agenda for the hearing set for 9 a.m. in the Capitol's Room 444 in the Capitol.

The Center for Economic and Policy Research has just released a new analysis of public employee pension obligations. Here's what it concludes:

The shortfalls facing most state and local pension funds have been seriously misrepresented in public debates. The major cause of these shortfalls has not been inadequate contributions by state governments, but rather the plunge in the stock market following the collapse of the housing bubble. Given the low PE ratios in the stock market, pension fund assumptions on the future rate of return on their assets are consistent with most projections of economic growth and past experience. Furthermore, when expressed relative to the size of their economies, most states are facing shortfalls that appear easily manageable.

The Washington, D.C. think tank describes itself as "promoting democratic debate on the most important economic and social issues that affect people's lives." With a board that includes NAACP president Julian Bond and actor Danny Glover, the center is generally regarded as a liberal organization. Here's a link to its website. We've embedded the report below:
The Origins and Severity of the Public Pension Crisis

We've been deluged with e-mail prompted by our Thursday report and today's story about the Little Hoover Commission's report and its recommendation that, among other measures, state and local governments should freeze current public employee pensions and lower benefits going forward. (Click here to download the 100-page document.)

So what do you think?

The state legal professionals' union said today that Thursday's Little Hoover Commission report and pension change recommendations are "irresponsible" and "cynical" and notes that "the various reports of the Little Hoover Commission seldom have any significant impact on policy decisions."

And that's the nice part of California Attorneys, Administrative Law Judges, and Hearing Officers in State Employment memo to members. Here's the whole thing:

Thursday's Little Hoover Commission report on California public pensions continued to draw reaction into the evening. We expect to hear from several more groups today.

Here's a statement released late Thursday by CalPERS:

Pensions play an important role in the overall compensation of public employees today and have for nearly 80 years, and any change must honor the promises made to all public servants.

Pension promises are funded for the long-term. CalPERS has earned a 7.9 percent return over the last 20 years above our assumed rate of return and we have gained more than $70 billion back since the financial crisis.

We recognize that pension costs are a source of fiscal concern for the State, local governments and taxpayers We look forward to engaging with the decision makers who must rely on all the facts when confronting these important issues and recommendations.

From Californians for Health Care & Retirement Security, a broad-based coalition of public employee groups:

Union reactions to today's Little Hoover Commission pension report and proposals have started rolling in. Here's what Professional Engineers in California Government says:

"The Little Hoover Commission is recommending something that it admits the courts have already determined is illegal and would violate the promise that government made to its public servants when they were hired," said Bruce Blanning, PECG Executive Director.

The report also concludes that putting in lower benefits for new hires "will not deliver savings for a generation."

Blanning added, "All surveys show that public servants are paid less than their private sector counterparts. The Legislature and Governor should direct their focus to legitimate savings rather than illegally violating long-standing commitments to those who serve the public."

PECG represents 13,000 state-employed engineers and related professionals responsible for designing and inspecting California's highways and bridges, ensuring that schools and hospitals are safe during earthquakes, and protecting our air, water and beaches from polluters.

And here's the statement from California Association of Professional Scientists:

UPDATED at 3:36 p.m. to add link to report.

The bipartisan Little Hoover Commission recommended today that California state and local governments roll back pensions for existing employees, dump guaranteed retirement payouts and put more of the pension burden on workers.

Although any attempt to reduce pensions for current workers would prompt a legal battle, the commission says that public pension funds are in such dire financial straits that they'll never right themselves by reducing benefits for new hires. The recommendation would not affect current retirees. Click here to read the commission's 106-page report.

The most controversial Hoover proposal would allow state and local governments to freeze existing employee pension benefits and then lower them for future years worked.

Courts have ruled that pensions are legally protected property and that government has a contractual obligation to follow through with them.

The Hoover idea echoes a similar plan that the California Foundation for Fiscal Responsibility has said it hopes to put to a public statewide vote next year.

Such a measure, if approved by voters, would undoubtedly trigger lawsuits that would test government's ability to alter pension promises prospectively. The foundation believes that its ballot measure would hold up in court.

Other Hoover proposals in today's report include:

The rate at which state workers filed their retirement papers between Jan. 15 and Feb. 15 rose 10 percent compared to the same period last year, according CalPERS' figures (see the table above), marking the fourth month in a row that more employees retired than the same period a year earlier.

More broadly, the retirement data shows that the rate of year-over-year monthly applications has increased in 29 of 38 times since January 2008.

The trend reflects the demographics of the state's aging workforce and, at least to some degree, the impact of furloughs, recent increases in what many employees pay toward their pensions and other factors that have made working for the state less attractive to long-time state workers.

Republican Sen. Tom Harman of Huntington Beach has introduced Senate Bill 689, which aims to "improve the disclosure requirements for state and local public retirement systems," according to this press release. "This measure enhances transparency for the most generous state and local pensions and establishes clear reporting guidelines for pension funds."

Translation: Anyone with a six-figure public pension gets extra scrutiny.

Click here for the entire press release. Here's the bill:
SB 689

PHOTO: Tom Harman / cssrc.us/web/35/

In today's Bee, Kevin Yamamura writes about the nonpartisan Legislative Analyst Office's latest take on California's public pension system: It seems unsustainable.

Jason Sisney, director of state finance for the Analyst's Office, appeared in a 14-minute video Thursday outlining ways lawmakers could reduce pensions for future employees throughout the public sector, including the University of California system, teachers and county government workers.

"Can the substantial disparity between public and private sector retirement benefits be sustained much longer?" Sisney asks in the video. "We think that it probably cannot."

Watch the analyst's video report below:

Nearly 12,000 state workers drew their first pension checks last year, up 23 percent from 2009, according to the latest retirement application data from CalPERS (click on the table above to enlarge it).

The jump in the rate of employees leaving state service was likely due to a mix of factors: Furloughs that cut take-home pay by nearly 15 percent made working less profitable than retirement for some state employees. The state's civil service is weighted toward baby boomers, many of them now reaching retirement age.

More people, 2,744, retired in January of this year, the most of any single month tracked by CalPERS going back to 2007. Although that was not quite a 4 percent year-over-year bump, it was significant because the increase was on top of a large base number - 2,647 retirements in January 2010.

Up to a quarter of retiring state employees time their exits for the end of the year, which spikes the number of first-time pensioners each January. CalPERS rules delay initial pension cost-of-living adjustments until the May following a retiree's first full calendar year away from service.

Enhanced retirement benefits can't be applied retroactively for state workers represented by the California Statewide Law Enforcement Association, a state appeals court has ruled.

The decision by three justices in Sacramento's 3rd District Court involves a dispute over the terms of a 2002 contract between the union and the state Department of Personnel Administration that raised the retirement formula for about half of the union's 7,400 or so members from 2 percent at age 55 (the so-called "miscellaneous" employee formula) to the state "safety" employee pension plan that allows 2.5 percent at age 55.

The union maintained that the contract called for the safety formula's retroactive application to former miscellaneous employees' first day of service. The administration countered that the upgraded benefit should apply only for service on July 1, 2004, and later.

An arbitrator in 2008 sided with the union and a Sacramento Superior Court judge confirmed the arbitration award.

But the appellate court decision by Justices George Nicholson, Kathleen Butz and Arthur Scotland agreed with the administration's contention that the contract couldn't be retroactively enforced because the impact of that policy wasn't sufficiently analyzed:

The MOU presented to the Legislature did not contain language that the change to safety member status would apply retroactively to convert prior miscellaneous member status to safety member status; (the legislation) was "silent" as to whether the benefit would apply retroactively to prior service; and the Legislature was not provided with a fiscal analysis of retroactive application of the agreement.

Union spokesman Kasey Clark said that CSLEA hasn't decided whether to appeal the 7-year-old case. Last month the union thought it had a contract that included pension and pay concessions, only to see it yanked off the table by the Schwarzenegger administration at the last minute.

"We understand this isn't a good time for courts to be reviewing pension enhancement cases," Clark said this afternoon. "Obviously, a contract like this wouldn't be negotiated right now."

Here's the court's decision, which was published today:

The Legislative Analyst's Office has taken a look a pension bill that was key to last year's budget deal and concluded that it was well-intentioned but flawed.

Senate Bill 867, authored by Republican Dennis Hollingsworth and backed by Gov. Arnold Schwarzenegger, established several new public reporting requirements and, most significantly, told CalPERS to make estimates of its unfunded liabilities based on the so-called "zero-risk rate."

The LAO concluded that the bill has "serious drafting problems" that make it needlessly alarmist or unworkable:

As part of its efforts to encourage scrutiny of CalPERS' investment return assumptions, SB 867 requires CalPERS to calculate pension liabilities in its reports to the Legislature and others using "a discount rate equal to the rate of the 10-year United States Treasury (UST) Note as of 30 days before the date of the report." This means that instead of calculating liabilities using CalPERS' annual assumed investment return (currently 7.75 percent), this report would require liability reporting assuming a much lower discount rate. As of January 21, 2010, the 10-year UST yield is 3.4 percent. Using such a lower discount rate would result in CalPERS calculating a much higher amount of liabilities and, therefore, future state and local costs, compared to standard public pension reporting methods.

Peter Feng, a spokesman for AFSCME in California, read last Thursday's State Worker column, "New proposal to cut pensions wouldn't spare current employees," and then e-mailed us with his reaction.

We're posting his unedited e-mail here with his permission:

With just 400 to 450 words for our Thursday State Worker column, much of what we learn in the ramp-up to writing it never sees print. Column Extras give you some of the notes, the quotes and the observations that don't make the cut.

Today's column looks at a pension change plan that the California Foundation for Fiscal Responsibility is preparing to push for a statewide vote next year. The plan would temporarily change pension accrual formulas for current state and local government employees, but there are other aspects to the proposal that we didn't cover. They include: a cap on benefits, changes to retiree health benefits for employees hired after July 1, 2013 and changes to pension fund governance.

Click here to see a draft of the proposal.

The foundation is going to promote its plan with the Legislature and Gov. Jerry Brown, but if lawmakers don't embrace it -- it's unlikely they will -- the group will start rounding up money to collect signatures to get the proposal on the ballot in 2012.

Our report on San Diego Mayor Jerry Sanders' plan to shift future city employees to a defined-contribution retirement system prompted a blizzard of e-mail, including an unexpected response from a Citrus Heights-based group that advocates pension reform.

Marcia Fritz, president of the California Foundation for Fiscal Responsibility, said in an e-mail to The State Worker this morning that her organization doesn't support Sanders' proposal. The foundation is the group behind the "CalPERS $100,000 Club" and the "CalSTRS $100,000 Club" databases.

Fritz's organization supports a hybrid option for public employees that blends a smaller defined-benefit pension with a defined-contribution plan. She attached these talking points that explain the foundation's position:

Why Pure Defined Contribution Plans for Public Employees Don't Work

Editor's note, 11 a.m.: This post has been updated with a link to a union press release that responds to Mayor Jerry Sanders' plan.

San Diego Mayor Jerry Sanders, a Republican, is pushing for a new 401(k)-type retirement system for new city employees, He wants to put the idea to a public vote.

The San Diego and Imperial Counties Labor Council's Secretary-Treasurer, Lorena Gonzalez, reportedly delivered a note with a can of cat food to the mayor's office last week. Her message: Eliminate defined benefit pensions and a generation of city employees will be consigned to retirement poverty, especially because San Diego workers don't pay into Social Security.

From the San Diego Union-Tribune:

City workers opted out of Social Security in 1982 when then-Mayor Pete Wilson promised the city would provide taxpayer-funded health care for retired workers. Retiree health care ended for new hires in 2005 so if the 401(k) plan is implemented, that would be a new worker's only source of retirement income.

Sanders acknowledged the Social Security dilemma and said some work groups might be allowed back into the system. He said any proposed city match for a 401(k) plan would likely have to be high to ensure approval from the Internal Revenue Service. A typical 401(k) plan has a 3 percent match.

The plan could go before voters in June 2012 , earlier if the state calls a special election next year.

Click here for the mayor's press release about his proposal. This link opens the U-T story by reporter Craig Gustafson. And here's the Labor Council's response to the Sanders plan.

PHOTO: San Diego Mayor Jerry Sanders (center) talks at a Friday press conference about plan to end defined benefit pensions for city workers. / www.sandiego.gov

CalPERS' September decision to immediately hike the cost of Additional Retirement Service Credit has prompted a Sacramento-based pension advisor -- and former fund employee -- to ask whether CalPERS staff benefited from inside information about the policy change.

Jim Niehaus of California Public Pension Advisors wasn't surprised by the decision to increase so-called "airtime" costs. After all, he worked at CalPERS from 1984 to 2000, then went to the Judicial Council as a retirement specialist for the Administrative Office of the Courts before retiring in 2009. As a pension consultant, he watches CalPERS closely.

But the board's decision to immediately implement the airtime increases in September instead of waiting until, say, Jan. 1, surprised Niehaus. Furthermore, he wondered if CalPERS employees benefited from advance knowledge of the policy change. CalPERS says that it handled the airtime price hike in accordance with state law and that the decision to immediately launch the change was made shortly before it actually happened.

In this Oct. 11 letter to CalPERS, Niehaus raised the fairness issue:

Editor's note, 2:40 p.m.: The Pew map shows legislative changes to pensions tracked by the National Conference of State Legislatures. It doesn't include recent contractual changes mandated for exempt and excluded employees or union contracts ratified by the California Legislature that require that state workers make increased contributions to their pensions.

State pension rollbacks have gained momentum nationwide, according to a report released this morning by The Pew Center on the States.

"Roads to Reform: Changes to Public Sector Retirement Benefits Across States," notes that in the first 10 months of this year, 19 states moved to reduce their pension liabilities by cutting benefits, upping employee contributions or both. Last year, 11 states made similar changes, up from eight in 2008.

As the map above from the Pew report shows, 39 states have cut their pension costs in some fashion since 2001. This link opens an interactive map that shows the last decade of changes year by year.

States also are changing retiree health benefit plans, the report notes: "All these states have acknowledged that the costs they face for these benefits have diverged from what they have been willing or able to pay and have started to take the steps to bring them back in line."

Pew's report, which you can read by clicking here, also includes state-by-state summaries of pension and retiree health benefits changes.

If you're one of several thousand CalPERS members who asked about the cost for adding service credit and it seems like it's took a long time for the fund to give you an answer, well, it wasn't your imagination.

Inquiries to CalPERS about service credit time have spiked so high that staff has fallen behind processing them for the last nine months, according to a report that the fund's board will hear on Tuesday.

The run up in requests was triggered in part by CalPERS' decision in September to immediately increase the cost of Additional Retirement Service Credit Purchases, or "airtime," by up to an average of 23 percent for state workers. (We broke the news about the policy change in this Sept. 9 post. The board hiked airtime prices the following week.)

Staff furloughs at the fund didn't help lighten the workload, either.

Here's what Donna Ramel Lum of CalPERS' Member and Benefit Services Branch says in a report scheduled for Tuesday's Benefits and Program Administration Committee meeting:

The Santa Monica-based Milken Institute has released a report that says the aging public employee population's increased draw on pensions as baby boomers retire, combined with growing demands for educating the state's children in the coming years, is putting California in a fiscal vise.

The researchers also conclude that raising employee contributions will be less effective over time because the ratio of actively contributing members to benefit recipients will continue to decrease.

"Addressing California's Pension Shortfalls: The Role of Demographics in Designing Solutions," which Bee's Dan Walters writes about in more detail in this Capitol Alert post, comes just two days after the release of another study that concludes state public employees aren't overcompensated compared with the private sector. Click here for our post about "The Truth about Public Employees in California: They are Neither Overpaid nor Overcompensated."

A week after lawmakers passed bills making sweeping changes to state employee pay and benefits, state officials still don't know exactly what the new legislation means.

Here's why: Gov. Arnold Schwarzenegger left the country after signing the main budget bill (which authorized him to continue furloughs for employees in unions without contracts), but he didn't sign the trailer bills containing employee compensation particulars, such as changes to pensions.

Apparently, those measures weren't rushed through the vetting and proofing process for his signature.

But the bureaucracy, like nature, abhors a vacuum. So in the absence of clear information from the administration, at least one well-intentioned department sent out some incorrect info to its employees about what the budget's passage means to its employees.

After we reported the confusion in our weekly State Worker column and posted the erroneous department memo and a subsequent retraction, the Department of Personnel Administration issued this e-mail Thursday afternoon:

Our sister blog, Capitol Alert, is reporting that Jon Coupal of the Howard Jarvis Taxpayers Association is mostly in favor of a plan favored by GOP gubernatorial candidate Meg Whitman to put new state hires into a 401(k)-style program.

His criticism: The plan doesn't go far enough.

Click here for Bee Capitol Bureau colleague David Sider's blog post.

If there's an election on the horizon, you can bet pension clawback crusader Paul McCauley has a ballot initiative in the works.

The Southern California CPA's latest, which would impose a variety of legally questionable taxes and fees on pension income above $40,000 per year, faces a Nov. 8 deadline to get 433,971 signatures to qualify for the ballot.

Like others McCauley paid the $200 state fee to file, we're betting this this measure dies a silent deadline death. Here's a summary from the Secretary of State's website:

As the dust settles from last week's Supreme Court furlough decision, the SEIU Local 1000 tentative agreement and the 2010-11 budget legislation, the impact of the interwoven events is becoming more clear.

In this post we'll share some answers to questions about what this means to state workers whose unions don't have a contract.

From the Notebook blog posts give you the notes, quotes and details that don't get into our state worker news stories but that inform the writing nonetheless.

Our Sunday story on changes made to state employee pensions in 2010-11 budget legislation included a quote from Gov. Arnold Schwarzenegger's at his Friday morning press conference.

You can hear what else the governor said about pensions and the budget by clicking here. Schwarzenegger starts talking about pensions at around the 3-minute mark. (Note: Listening to the 21-minute recording requires an MP3 file player.)

Photo: Gov. Arnold Schwarzenegger, talks to the press after lawmakers approved the budget at the Capitol Friday morning. Sacramento Bee / Hector Amezcua

Talks between state employee unions and the Schwarzenegger administration are continuing -- sort of -- while pension costs remain a sticking point to a budget deal between Democrats, Republican Arnold Schwarzenegger and his GOP colleagues in the Legislature.

The last negotiations with SEIU Local 1000 were last Friday, Department of Personnel spokeswoman Lynelle Jolley told us this morning. No more negotiations have been scheduled with the state's biggest state labor union, but Jolley said that DPA is "in talks with SEIU and virtually all of the unions" even though there's been no direct bargaining.

We have a call in to Local 1000 for the union's take. The union's last bargaining report on its web site is dated Sept. 2.

From where we sit, it looks like the Schwarzenegger administration is hoping to get a deal with the Big Dog, Local 1000, which represents 95,000 state employees, and then herd the smaller unions into the same kennel.

State workers would pay thousands of dollars more to purchase service credits under a policy change that CalPERS leaders will consider next week.

The fund's Board of Administration is looking at immediately raising the cost of Additional Retirement Service Credit Purchases, or "airtime," by up to an average of 23 percent for state workers. The table above, which comes from this CalPERS staff report, shows how the proposed increase would affect the state's miscellaneous employees in various age groups who make $50,000 per year.

When legislation passed during the 2003-04 legislative session made airtime available to CalPERS members, the assumption was that many employees would purchase service time mid-career. That would allow the employees' money to grow until they retired and then drew against the funds.

It didn't happen. After studying CalPERS member retirement patterns and service-credit purchases over a 10-year span, the fund's staff found that members bought airtime shortly before retiring, which meant the added contribution had little or no time to grow before being drawn down.

That's why CalPERS' staff ...

Chief economic adviser to Gov. Arnold Gov. Schwarzenegger's, David Crane, reads The State Worker. How do we know? Because he responded to a question posed at the end of our Monday post, "Schwarzenegger's job chart."

In a video posted here, the governor credits Crane with pulling together a chart that indicates private sector employment in California has plunged while public sector employment has remained essentially flat.

That chart was the subject of our Monday post, which concluded with a question: Is job loss the only legitimate way to measure 'pain'?

Here's Crane's answer, sent via e-mail through administration spokeswoman Rachel Arrezola:

As we've reported, the Government Accounting Standards Board last month issued its preliminary thinking on major issues related to pension accounting and financial reporting by employers. The potential impact of the rule changes could be far-reaching with serious political repercussions. The Bee's Dan Walters wrote about GASB's proposals in this column.

GASB has been taking public comment on the proposed rule changes. The deadline for submitting one is Sept. 17. A few State Worker blog users have asked how they can participate.

You can click here to send an e-mail to the board's director of research and technical activities at director@gasb.org. Reference Project No. 34 in the subject line.

Send letters to:

Director of Research and Technical Activities
Project No. 34
GASB
401 Merritt 7
PO Box 5116
Norwalk, CT 06856-5116

Click here for a plain-English explanation of the proposed rules. This link opens analysis of the potential impact to state and local government by The Segal Group. You can view a video Q&A about the GASB proposals by clicking here.

Representatives of the Association of California State Supervisors, an organization that advocates on behalf of exempt state employees, posted notes last week from its Thursday meet and confer with the Department of Personnel Administration.

According to those notes, ACSS pushed the administration for seven guarantees In exchange for pension concessions similar to those agreed to by six bargaining units:

• Protection from minimum wage.
• Furlough protection through July 1, 2013.
• Benefit cost increases to be picked up by the state.
• An added 5 percent salary step added to the top of each pay scale.
• No more than eight unpaid leave days through June 30, 2011.
• An option to transfer the value of leave hours above the cap into an investment program.
• An extension on the June 30, 2012 deadline to use up banked furlough hours.

Click here to read the ACSS minutes.

The Little Hoover Commission is holding a hearing on public employee pensions on Thursday at 9 a.m. in Room 437 of the State Capitol in Sacramento. The commission will hear from

• Teresa Ghilarducci, professor of economic policy analysis at The New School for Social Research in New York City
• Marcia Fritz, president of the California Foundation for Fiscal Responsibility
• David Low, director of Governmental Relations for the California School Employees Association
• Keith Brainard, research director for the National Association of State Retirement Administrators

Click here to view the meeting agenda.

CAHP, CAPT, AFSCME and CDFF have agreed to contract proposals with Gov. Arnold Schwarzenegger. The deals, ranging from two years to three years, include pension concessions and protections against minimum wage in the event of a budget impasse.

Here's the governor's press release.

Our quick story about the deals is here.

We're continuing to cover events as they unfold this afternoon.

A bill that sought to roll back retirement benefits for newly hired state workers has failed to get out of committee.

Senate Bill 919, unveiled in April with much fanfare by Gov. Arnold Schwarzenegger and the measure's sponsor, GOP Senate Leader Dennis Hollingsworth, died in the Senate Public Employees & Retirement Committee on a 2-4 party-line vote.

The bill also included changes to retiree health benefits.

Click here to read the measure. This link opens the committee vote count.

The Association of California State Supervisors is reporting that the Department of Personnel Administration is backing away from Gov. Arnold Schwarzenegger's demand that state workers' pay be cut by 5 percent.

The association's board and staff members met with DPA Deputy Director Julie Chapman on Monday. According to these ACSS notes from the meeting, "The permanent 5 percent pay cut is off the bargaining table."

But the administration's new approach still includes cuts, according to the ACSS notes:

Gov. Arnold Schwarzenegger has responded to Senate President Pro Tem Darrell Steinberg's criticism of the administration's bargaining tactics and topics. Here's a snippet of a letter just released by the governor's office:

The CalPERS transparency legislation you referenced in your letter is most definitely among the issues being raised in negotiations with the unions. As I have made clear since my State of the State address in January, our unsustainable pension costs must be addressed this year. I have tried to be as up front about this as I possibly can: I will not sign a budget this year without budget reform and pension reform.

While my administration is negotiating in good faith with the unions on all aspects of the pension reform measures we are proposing, there are four elements that must be done legislatively separate and apart from any memorandums of understanding:

1. Roll back the expansion of pension benefits adopted in Senate Bill 400 (Chapter 555, Statutes of 1999) for all new hires upon adoption by the Legislature.
2. Permanent five percent increase in employee pre-tax contribution toward retirement benefits.
3. Calculate the retirement rate based on the highest three years of wages during employment instead of the highest single year.
4. Require the CalPERS' chief actuary to submit a report to the Legislature on investment return assumptions based on both lower and higher estimates than the actuarial return assumption and have this report evaluated by a qualified third party.

Click here to read the governor's letter to Steinberg.

Today is the deadline for bills to move out of their house of origin or die.

Several bills with potential impact on state workers have been in play this session. We handicapped several Assembly measures in this post. Here's what's happened since then with those bills and one Senate measure, SB 919, supported by Gov. Arnold Schwarzenegger.

Bill: AB 1699
What it does: Ensures that state employees will continue to be paid even if a budget is not enacted by the beginning of the new fiscal year.
Status: Cleared the Assembly, 54-19. Now it goes to the Senate.

Bill: AB 1765
What it does:Prohibits a state employee from being furloughed, during a time in which California's unemployment rate reaches or exceeds 8.5%, if the employee is in a position funded at least 95% by the federal government, performs services that combat the state's recession, and works for the California Unemployment Insurance Appeals Board or the Employment Development Department. Specifically, this bill prohibits a state employee from being furloughed when certain criteria apply.
Status: Assembly passed on a 55-14 vote. The bill now goes to the Senate.

Bill: AB 2008
What it does: Prohibits state civil service employees of certain specified agencies and boards from being furloughed by the Governor through Executive Order or by any other action of a state agency, board or commission.
Status: Assembly passed 55-21. On to the Senate.

Bill: SB 919
What it does: Alters the Public Employees' Retirement Law to reduce benefits for new hires and increase employee contributions for existing and future hires, among other changes.
Status: Stalled in Senate Public Employment & Retirement Committee, which heard testimony but never took a vote.

The Legislative Analyst's Office has updated its online budget recommendations database to include the latest information on the state's 2010-11 contributions to CalPERS and CalSTRS.

You can read the office's CalPERS analysis by clicking here. According to the analysis, if the CalPERS board approves the rate plan presented May 19, it "likely would increase the state's 2010-11 general fund budget problem by a net amount of about $100 million by increasing baseline state pension costs above those already assumed in the governor's budget package."

Other state funds would pay out more, too, although the LAO thinks the total dollar increase to all funds next year would be less than the $600 million estimated by CalPERS.

The CalSTRS info is here.The LAO figures that the state's 2010-11 contributions will increase by $117 million above the amount proposed in the governor's budget.

The Bee Capitol Bureau this morning hosted Assembly Majority Leader Alberto Torrico for a wide-ranging discussion of his run for state Attorney General, the budget, education, prisons and state politics. Click on the viewer above to watch Torrico's response to the question, "What do you think about the governor's push for lower retirement benefits for new employees?"

CalPERS this morning postponed a decision on imposing a $600 million rate hike on the state, with an eye toward delaying the increase for a year. Bee colleague Dale Kasler reports the breaking news in this story.

Here's our State Worker column about the CalPERS staff recommendation to raise the employer rates. This link opens a post with the fund actuary's proposal. And click here to for the Legislative Analyst's assessment that CalPERS probably doesn't need to boost employer contributions by $600 million.

Our State Worker column in today's Bee references Steve Poizner's remarks that state worker pension deals should be put to a public vote.

Click the viewer above to see what the Insurance Commissioner and GOP gubernatorial candidate said at a Tuesday evening Tea Party rally in Shingle Springs about how he would curb state employee union power and pensions.

VIDEO CREDIT: Jack Chang, Sacramento Bee

Insurance Commissioner Steve Poizner, one of two GOP candidates for governor, told a Shingle Springs crowd last night that if elected in November he would place state employee pension deals before voters.

Poizner made the comment during a rally of 300 to 400 tea partiers at Ponderosa High School. He was responding to a question from the audience about how the former Silicon Valley entrepreneur would tame unions and other special interests that have "taken over and command such a large percentage of the budget with all of the retirement benefits and everything else that is going on."

After talking about his support for paycheck protection, which would require public employees opt in before their money goes to a union, Poizner cited the California constitution for his next idea:

"With regards to pensions, there are billions of dollars in unfunded liabilities here ...

"As governor I'm going to put all these pension deals on the table. Voters are going to have to approve them before any of these pension deals get passed. That kind of transparency will go a long way to solving the problem."

We're contacting the Poizner campaign this morning to get more details about his position....

The Senate Public Employment and Retirement Committee is hearing testimony on SB 919 at 1:30 p.m. today. You'll recall that the measure, sponsored by Senate Republican Leader Dennis Hollingsworth, would cut retirement benefits for new state workers. The measure would not impact benefits for current employees.

Click here to open the committee's Web page and then click "Audio" to listen to the hearing. This link opens a recent Bee feature that explains parts of the bill. Click here to read the measure's language.

The Center for State and Local Government Excellence and the National Institute on Retirement Security jointly released a study this morning comparing what state and local government employees earn compared with private sector workers. Among the findings researchers noted:

Jobs in the public sector typically require more education than private sector positions. State and local employees are twice as likely to hold a college degree or higher as compared to private sector employees. Only 23 percent of private sector employees have completed college, as compared to about 48 percent in the public sector.

Wages and salaries of state and local employees are lower than those for private sector employees with comparable earnings determinants, such as education and work experience. State workers typically earn 11 percent less and local workers 12 percent less.

During the last 15 years, the pay gap has grown: Earnings for state and local workers have generally declined relative to comparable private sector employees.

The pattern of declining relative earnings remains true in most of the large states examined in the study, although there does exist some state level variation.

Benefits make up a slightly larger share of compensation for the state and local sector. But even after accounting for the value of retirement, healthcare, and other benefits, state and local employees earn less than private sector counterparts. On average, total compensation is 6.8 percent lower for state employees and 7.4 percent lower for local employees than for comparable private sector employees.

Click here to download the report. This link opens the "About the Center" page on the Center for State and Local Government Excellence website. You'll notice is has ties to retirement funds. Clicking here opens the National Institute for Retirement Security's site.

The bipartisan Little Hoover Commission met yesterday to hear testimony about public employee pensions. The commission, which conducts its business openly, has posted an agenda from the hearing that includes links to prepared statements made by witnesses.

(Gov. Arnold Schwarzenegger's economic adviser, David Crane, spoke from an outline that was provided to the commission. Staff also gave commissioners op-eds Crane has written about public employee pensions.)

Click here to open the commission's agenda page. We hear that the commission staff plans to post public comments made at the hearing, so check back to the Little Hoover site soon for those.

This link opens our previous report about the hearing and when the commission might issue a report.

Click here for Crane's comments at a January CalPERS forum on pensions that included the infamous David-vs.-David spat with lobbyist Dave Low.

Our column in today's Bee looks at Senate Republican Leader Dennis Hollingsworth's bill to roll back pension benefits for new hires, SB 919.. and the politics surrounding the issue. Click the viewer above to see Gov. Arnold Schwarzenegger's response to a question about public pensions during Wednesday's press conference to announce the measure.

The SB 919 language is now online. Click here to read it.

VIDEO CREDIT: Hector Amezcua, Sacramento Bee

Gov. Arnold Schwarzenegger and Sen. Dennis Hollingsworth, R-Murrieta, called today for significant changes to state employee retirement benefits during a press event to announce the Senate Republican leader's pension and health benefit bill, SB 919.

As of the 2 p.m. press conference, the measure's language hadn't been posted to the Web. A fact sheet distributed by Hollingsworth operatives highlights the proposed changes for new hires, including:

• Reducing the formula for non-public safety employees by adding 10 years to full retirement eligibility age, which would be 65.
• Changing the retirement formula for CHP, firefighters, correctional officers and other peace officers from the current 3 percent at 50 to 2.7 percent at age 57.
• Returning milk inspectors, billboard inspectors given a state safety classification to the miscellaneous/industrial classification (and the lower benefits that go with the change) that they had before SB 183's passage in 2002.
• Changing the calculation for retirement benefits for all from the highest single year to an average of the highest 3 years.
• Eliminating the exemption on the first $200 of wages that goes into calculating CalPERS employee contributions to the fund.

It also makes some changes to the health benefit program:

• Adds 5 years to the length of service time (currently 20 years) required to be fully vested for the retiree health care benefits.
• Gives the state the authority to purchase health insurance on its own instead of through CalPERS.
• Cuts the state's contribution to retiree health care costs from 100 percent of the average HMO cost to about 85 percent, matching the contribution made for active employees.

We'll be posting more about this, and we're writing about it for tomorrow's State Worker column. Stay tuned.

The bipartisan Little Hoover Commission is holding its first public hearing about California public pension systems on Thursday at 9 a.m. in Room 437 at the Capitol.

The agenda, which you can view here, includes comments from the following:

• Girard Miller, a Malibu-based retirement plan investment consultant


• Tony Oliveira, Kings County supervisor, and a member of the CalPERS Board of Administration


• Ron Cottingham, president of the Peace Officers Research Association of California


• Richard Stensrud, chief executive officer of the Sacramento County Employees' Retirement System


• David Crane, special adviser to the governor for jobs and economic growth

The public can speak to the commission at the end of the hearing and submit comments on public pensions in writing.

Thursday's hearing is the first of two, commission Executive Director Stuart Drown said Tuesday afternoon. He wouldn't speculate whether the commission might issue a report or recommendations before the fall elections or even by the end of Gov. Arnold Schwarzenegger's term.

"I hesitate to put an end date on (the process)," Drown said.

The California Channel will make Thursday's hearing available online, although it wasn't clear as of this morning whether it will be streamed live or available only as an archived event. We've asked the folks at Cal Channel, and we'll post more details when we find out.

Gov. Arnold Schwarzenegger talked about public employee pensions in his weekly address posted on YouTube today. Click the viewer to see the 2-1/2 minute clip.

Our lead story in today's Bee reviews the sharp increase in the rate of state worker retirements last year and the 30 percent jump in the number of initial CalPERS pension checks issued in January.

The data came from the fund. Click here to open the spreadsheet with more detailed statistics, including monthly retirement figures for for all CalPERS members, not just state workers, going back to the start of 2007.

IMAGE: www.freeclipart.com

Coming off his investigative report, "Pension promises threaten California cities, counties," Bee reporter Phillip Reese hosts a live chat at noon Tuesday. Click here to join the conversation at 12 p.m..

A few months ago, The Bee ran this story about a spat over public pensions that got personal between Gov. Arnold Schwarzenegger's economic adviser David Crane and California School Employees Association lobbyist David Low. The two went at each other during a CalPERS forum Jan. 29 in Sacramento that was intended as a reasoned discussion of pension fund costs.

Crane, who amassed a fortune in global investments, has been the administration's point man in its effort to trim pension benefits for new hires. Low has been an outspoken opponent of the idea.

We knew that CalPERS had recorded the daylong forum and asked for the footage a while ago, but we didn't know the video was available. On Thursday, we ran across this page on CalPERS' Web site with links to video of the Sacramento forum and a similar forum Feb. 12 in Los Angeles.

Clicking the viewer below will start the 72-minute segment that included the David-vs.-David debate. Crane's remarks start at the 30-minute mark. Low's comments start at about the 45-minute mark. He takes a shot at Crane's income during the 49th minute. Things get heated at the end of minute 54 when Crane responds to the Low blow.