The State Worker

New public pension proposals target future employees

Then-San Jose Mayor Chuck Reed speaks about public employee pensions at a 2014 press luncheon in Sacramento.
Then-San Jose Mayor Chuck Reed speaks about public employee pensions at a 2014 press luncheon in Sacramento. Associated Press file

A group seeking to alter California’s state and local public pensions said Monday that it is filing two new ballot proposals, hoping to put one of them before voters next year.

One measure would put employees who first join a public pension system on or after Jan. 1, 2019, into 401(k)-style retirement savings plans that guarantee fixed contributions from employers instead of promised retirement payments by government agencies.

The second measure would cap the amount of money employers could pay for new hires’ retirement benefits to a certain percentage of their salary. For most new employees, employers could contribute no more than 11 percent of base compensation to pensions, or a maximum of 13 percent for police, firefighters and other public safety workers.

Voters at the state and local levels would have the power to override the downgraded benefits or the cost caps at the ballot box.

“We are trying to focus on controlling the cost of benefits,” former San Jose Mayor Chuck Reed said in a Monday morning conference call with reporters. “The problem is only going to get worse.”

Dave Low, who leads a union coalition fighting the pension initiative, said in a news statement that the proposals will be two more “failed attempts” to alter the pension system that would, if passed, cost far more money than they save, chill hiring and retention in public service, “and jeopardize a secure retirement for hardworking middle-class families.”

The new proposals attempt to snap a decadelong string of political and legal losses by pension-change proponents. In 2005, former Republican Gov. Arnold Schwarzenegger pulled the plug on a proposed ballot measure criticized for cutting death benefits for the survivors of police officers and firefighters killed in the line of duty. Last year, Reed lost his court fight challenging the ballot description given by Democratic Attorney General Kamala Harris to a proposed initiative he backed.

Reed and former San Diego City Councilman Carl DeMaio, a Republican, tried again this year with a proposal that would have, among other provisions, required voter approval before state or local government employees could receive increased retirement benefits. Unions roundly criticized the measure, and it again received title and summary language that doesn’t poll well with voters, including a description that said it would downgrade vested benefits for current employees.

The new proposals, DeMaio said, swerve around that obstacle by reducing benefits only for future employees, thereby leaving the promises made to current workers untouched. The measures also appeal to Californians who, according to a recent survey by the nonpartisan Public Policy Institute of California, strongly support the idea of controlling pension benefits for new hires via the ballot box.

The measures would not, however, change the cost of retirement benefits for current employees. State analysts and others say those promises are weighing down public pension funds with long-term obligations they can’t meet without demanding more money from taxpayers or deferring money from core services to make pension-fund investments.

Reed said Monday that proponents will decide which plan to put forward once Harris issues titles and summaries within the next two months. That would leave about five months to collect signatures in time to put a proposal on the November 2016 ballot.