Gov. Jerry Brown’s aides will meet today to devise a response to the California Public Employees’ Retirement System board decision that dealt the governor one of his worst losses of this term. Options aren’t great.
By a 7-5 vote, the CalPERS board Wednesday watered down the Public Employee Pension Reform Act of 2012, a law that Brown had called a “sweeping bipartisan pension reform.”
Much of the law remains intact. But CalPERS’ action also could lead to more pension spiking. The vote also made clear a truism about legislation: Entities that interpret the laws have final say about how sweeping any reform might be.
Over the years, unions have negotiated nearly 100 pay sweeteners in contracts with local governments. Like public employees hired before the new law, cops hired since 2013 can get pay and now pension bonuses for being good shots, as can librarians who help patrons find reference material, clerks who type quickly, and laborers who do finishing touches on concrete work.
The CalPERS board agreed these roles should count toward pensions, and Brown didn’t object to those specifics. But he did urge the board to declare that extra pay given to newly hired workers for temporary promotions should not be counted toward pensions. He lost.
“Today CalPERS got it wrong,” Brown said in a statement after the vote.
The administration could sue, though any suit would take years to resolve. Brown could use his rule-making power to soften the decision. But organized labor, which supported CalPERS’ action, could sue to enforce CalPERS’ interpretation.
The governor could call the Legislature into a special session and urge lawmakers to approve a new pension bill. Democrats who control the Legislature probably have more pressing concerns. Many of them wouldn’t want to alienate public employee unions, a source of campaign money and workers, in the months before the November election. Still, a legislative fix probably is the best hope.
Upon signing the bill in September 2012, Brown issued a news release crowing that the new law “bans abusive practices used to enhance pension payouts.”
The legislation, he had said, would end abuses in a variety of ways, including by requiring “three year final compensation to stop spiking for all new employees,” and calculating “benefits based on regular, recurring pay to stop spiking for all new employees.”
CalPERS seemed to share that view in 2012. Its preliminary analysis of the bill said “using regular rates of pay to calculate the final compensation for new employees would protect the pension trust by reducing compensation volatility.” That was then.
Rosanna Westmoreland, CalPERS’ external communications manager, said in an email to The Bee on Thursday that staff “since that time completed many hours of additional analysis, including engaging stakeholders to provide input.”
“The resulting recommendation is consistent with the law as written,” Westmoreland wrote.
Perhaps the governor would have greater success if he takes another stab at legislation overhauling pensions. But if he does, and if he manages to get legislative agreement, he might want to tone down the hyperbole about historic reform. We all should take any CalPERS preliminary analysis for what it is.