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The Public Policy
Jerry Brown Starts to Get It Right
Finally he’s proposed a public pension reform plan that goes in the right direction.
When he was elected California’s oldest governor last November, Jerry Brown wasn’t the same man as “Governor Moonbeam,” the state’s youngest governor (1975-83). In the meanwhile he’d spent time in a Zen monastery, run for president, and served as state attorney general and, most importantly, as an effective mayor of Oakland where he had to deal with the reality of everyday problems.
More than a few longtime Brown watchers among Republicans thought he might be the only person who, as governor, could get the state’s largest special interest, the public employee unions, to swallow hard and accept reform of the state’s deficit-laden pension system.
For most of the year he has tacked a little left, then a little right to get things done. Now, he has finally proposed a public pension reform plan that definitely goes in the right direction — if only he can sell it to a legislature top-heavy with Democrats. Many of these Democrats are indebted to the lobbyists of the public employee unions. Brown, of course, knows this.
Some of the features in Brown’s 12-point plan are these:
• Increasing the retirement age from 55 to 67 (with a lower age to be spelled out for public safety workers).
• Replacing the current “defined benefit” pensions with a hybrid program that includes a defined benefit component, but also a 401(k)-like defined contribution component to which the employee would pay. This would have the effect of reducing the creation of unfunded liabilities.
• Prohibiting retroactive pension increases.
• Ending “spiking” in which an employee’s salary is inflated in his/her final years in order to swell the size of the pension.
• Requiring all employees to contribute at least 50 percent of the cost of their pensions (they now pay nothing).
Unaccountably, the Brown plan omits any reference to the separate California State Teachers Retirement System (CalSTRS), which has its own $56 billion unfunded liability. It will soon be rattling a tin cup in the capitol for a handout which, by law, must be approved by both the legislature and governor.
Democratic legislators gave the introduction of Brown’s plan a tepid response, which was warmer than the wary one given by the public employee unions. They argue, as they long have done, that collective bargaining is the right way to deal with such matters. Translation: stand pat.
The state’s nonpartisan Legislative Analyst’s Office, on the other hand, praised the Brown plan, especially the 401(k)-style savings plan and the rise in the retirement age.
What are Brown’s chances with the legislature? The plan will get its first review by a legislative committee on December 1. A relatively small issue such as prevention of “spiking” might pass, but resistance will be very strong against making other features apply to current employees. Chances are better for some of the more sweeping changes to apply only to new hires. Yet, if the reforms only affect new employees, it will take years for substantial savings to be felt, while the shortfall is here now — $500 billion worth.
Brown is no stranger to maneuvering. He has raised the suggestion of asking the legislature to put on the November 2012 ballot a referendum to provide new rules for the 3,000-plus public pension plans in the state. In other words, let the people decide. To make this happen, he would need a two-thirds vote of the legislature.
Meanwhile, two groups of Republican activists are considering ballot initiatives to make more sweeping reforms than Brown has proposed. The very threat of a successful signature-gathering campaign resulting in a citizens’ initiative may be enough to scare the legislature into accepting much of Brown’s plan or, alternatively, his referendum idea. The unions remember Proposition 13 in 1978 and how it upended the state’s property taxing, If there is anything they fear it is the possibility of a citizen initiative qualifying for the ballot and being voted on by millions of voters sick of deficits, recessions, and overly generous public employee pensions.
About the Author
Peter Hannaford was closely associated for a number of years with the late President Reagan, beginning in the California Governor’s office. His latest book is Presidential Retreats.
Letter to the Editor View all comments (24) | Leave a comment
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Lullabys, Legends and Lies| 11.11.11 @ 7:59AM
I don't think California's ready for this yet!! They have to fall even farther into the blackhole of debt before they finally wake up and realize that their State Government is in bed with the Public Employee's Unions (and always has been). It's kind of sad though, but I think it's something in their water supply (possibly poison)? But if they're really going to go after Pension Spiking (and it's about time every State and City in the Nation did this), I say go for it, but they have to do it retroactively, and completely across the board (do not exempt the Teachers, Cops or Firefighters). The reality is, we've got retired Public Employees making "more" in retirement, than they averaged when they were actually on the job, but they're not arresting anybody anymore, or putting out burning buildings, or teaching the poor children who would be getting better grades if only we threw some more money at them. This is insane!! Nobody should be paid more in retirement then when they were really doing their jobs!! So if you really want to fix things, I've got really bad news for you retired Public Employees, we're coming after your pensions too (they were ill-gotten in the first place). You know you've been robbing us blind for decades, and we know you've been robbing us now too, so don't shed those crocodile tears now. It's way too late for that!! And please don't tell us that sad story about your bad back, we really don't want to hear about it. I've got news for you, we all have bad backs!! But we got ours from carrying your fat bloated asses around!!
Old Joe| 11.11.11 @ 8:31AM
Right on, right on, right on.
Jocon307| 11.11.11 @ 10:52AM
This is a great comment! You've said it all.
I like Brown's plan, I esp. like that he raises the retirement age beyond 65, that puts to good use the forward thinking Cali is known for.
Any changes like this should be phased in, quickly, but still phased in and I do think there are big differences between police, fire and corrections than folks working at the DMV or teachers.
Well, if he can get this through, well, that will be amazing and will set a standard for all others.
What's that saying? Fortune favors the bold?
Good Luck, Gov. Brown, but thanks at the very least for trying.
Jaynie Jayne| 11.15.11 @ 12:16AM
AMAZING comment! That's it in a nutshell!
Redstateboy| 11.11.11 @ 8:58AM
Wait...., wait until HusseinCare kicks in. In 1 State, just ONE! (Tennessee) - HusseinCare will add 142 Million Extra dollars every year for 7, SEVEN!! straight Years to Our State Budget.. In the People's Republic of California?? It's in the Billions!!!!!! As is for the already Broke People's Republics of IL. and NY. All just part of the Liberal Slave (Democrat) Party's plan to destroy the Nation.
Dave | 11.11.11 @ 9:33AM
I'll spare the longer opinion/commentary, but will state it briefly like this: Brown's plan, in its fullest form, has as much chance of passing the iron fisted goon squad of his Democrat majority in Sacramento as David Duke has of being elected homecoming queen at the next NAACP class reunion.
Oh, they might nibble around the ear lobes, but ain't nothin' much going to change but the state and local tax rates, and those pesky ... fees.
You remember *FEES don't you? Before the back pasture sheep wised up, they used to be called ... TAXES.
*Same ol' pig; different lipstick.
For those just trying to survive until the dirt nap arrives, you might want to check the pending, or already arrived, increases in your water, sewer, trash service, phone, and assorted state, county and local utility rates. Or as they're occasionally referred to as the earlier mentioned ... FEES. These outfits haven't, as yet, had to note them as FEES on your monthly bills. But then, monopolies aren't actually required to. Besides, who else you gonna call to keep the lights on? Wal-Mart? Home Depot? The Roto-Rooter Man?
Just don't go to sleep, Beaver.
MizGeek| 11.11.11 @ 11:05AM
Jerry may finally be catching the clue that his state is headed for financial meltdown, if it's not already there and his ideas are, in normal peoples eyes i.e. non-union folks, a good start. The only thing that will really begin to resolve these issues are the elimination of unions at the state level. We sorely need to eliminate public sector unions at all levels of government unless we start letting the people vote on proposed contracts.
Jaynie Jayne| 11.15.11 @ 12:32AM
Gosh MizGeek, I wish you were right, but alas you are not. Gov MoonBeam will NEVER get it. He doesn't give a s***. They line his pockets. I was hopeful too but it will not be so...
JmsA| 11.11.11 @ 11:30AM
Don't forget the liberal (and pardon me for repeating myself) democrat-controlled legislature.
Rogue Elephant| 11.11.11 @ 11:37AM
LOL. What a load of bullcrap.
First, Brown's "plan" is nothing but empty promises for the gullible (promises he knows he can't get past the union-controlled, Democrat-dominated legislature).
Second, Brown's plan weakly promises to address future obligations, not the current obligations that loom over and threaten to crush state finances.
Third, Brown's plan is a ruse to try and circumvent or avoid a ballot initiative that would better address future pension obligations.
That being the case, your fluff piece only helps Brown dupe voters. Whose side are you on, anyway?
MyGirlFriday| 11.11.11 @ 3:24PM
Dear Rogue, I'm with you. This proposal by Brown is nothing but a ruse. The electorate in California is so ignorant. They just voted for billions of dollars be used through the selling of bonds for of all things road repairs! They already pay the highest gasoline taxes in the nation which a large portion is supposed to go for road repairs. They don't even bother to ask where the tax money went. What will be next, will they be asking for billions of dollars in a bond measure to pay for street lighting? And you have U.C. Berkley student's protesting at Bank of America about their college loans. These ninnies don't understand that it is their own Board of Regents that keeps giving the Teacher's (Union's) higher salaries along with themselves which increases tuitions which increases their loan debt. For every paid professor at the U.C. system there is one full time paid union administrator! California is done for. The only good thing that can happen to California is for the Republicans to win in 2012 and say: NO BAILOUT FOR YOUR STATE. Until you kick these free loaders to the curb, Californians will never come to terms with their profligate entitlement spending and pension reform. And what the author neglects to say is, Brown will not touch the California Teacher's pensions because that is who got him elected.
gary siebel| 11.11.11 @ 12:13PM
I am shocked I say, yes, shocked and appalled that the AS would publish ANYTHING that might suggest the retarded GUV of Wisconsin took the wrong approach! (Ohio !)
The Tea Party is dead; they just don't realize it yet. Perry inadvertently exposed their flaws.
However, Jerry B was actually a failure as mayor of Oakland. He left it as bad as when he started. Gavin Newsom is trying to do the same thing: leave an unimproved and debt ridden city behind while he moves on. All the same, I favored Jerry for Guv because he had experience in the job and it has served him well.
Repubs (including those in Cali) had better start learning to negotiate or they will get hammered in 2012. Intransigence could be fatal by then.
Truth to Power| 11.11.11 @ 4:37PM
Gary Siebel has exposed the great flaw of progressivism. They don't get that there is no more money to buy votes. California is America's Greece. We need to build a fence around it now.
Joe Gause| 11.13.11 @ 7:55PM
Truth: Wait until I sell my underwater house and cross the state line before you put up the fence.
emo| 11.12.11 @ 7:55AM
""The Tea Party is dead; they just don't realize it yet. Perry inadvertently exposed their flaws""
Please elaborate. Perry's fall from 20% to 5% is entirely due to Tea Party supporters abandoning him and his non-Tea Party positions especially on immigration.
That "retarded Guv" of WI you mention is already saving the state and local communities hundreds of millions of dollars.
Jaynie Jayne| 11.15.11 @ 12:28AM
'The tea party is dead"? You're not too quick are you? That's okay, we understand. Just keep votin' for the lefties Gary...You'll go down with them and the rest of us will leave CA. You can pay the taxes then - we'll be gone.
cicero| 11.11.11 @ 12:19PM
For years I have been touting the benefits of Chapter 9 of the U. S. bnakruptcy code. Now that municipalities are starting to use it, can States be far behind?
There is no way to slowly elide into reform. The government employee unions have bankrupted all that they have touched. The people have to say, Enough, and refuse to fund them any more. Nothing else will do.
POST American| 11.11.11 @ 9:41PM
-------------Tavistock '70's Show' SAP OP------------
--------------------------ALERT!--------------------------
Merlin| 11.12.11 @ 6:22AM
A bit off topic, but this article once again illustrates the need to outlaw all defined benefit pensions. A pension should be what is in the account and nothing else.
John| 11.12.11 @ 8:47AM
That SEIU thug, Jerry Brown, I don't trust him at all, no matter what he does to crack down on the unions.
POST American| 11.12.11 @ 10:32PM
---------------------BOTTOM LINE---------------------
This '70's Show' aside, America has been
hijacked by offshore banking cartels, and
has been in the grips of a long term strategy
of economic and political TREASON, and
moral /cutural subversion ---at the hands
of the utra-rich, Luciferian, TAX FREE foundations.
Our entire cyber 'world' is holograhic
--a mere mirage. There is nothing
'ssss--US--stain----Abel' about it.
Now, as it's falling apart, as they know
it must ---they blame the 'ITs'.
The 'ITs', kiddies, are US.
It's a CON grounded in USURY,
the fractional reserve debt serf generator,
administered, as it ever is, by inbred,
psychopathic, actuaries.
Wake up to the ILL--usion ---and it's OVER.
D Roamer | 11.13.11 @ 11:24PM
California has to wait for bankruptcy, and the judge to impose what the governor has proposed. Not for new hires, but for ALL.
Redistricting was a farce. Have to find a way to make this fair.
Tort reform would change the health care industry dramatically.
Unfortunately, with the ignorant, indolent, and selfish populace; nothing will change. Many of these voters, cannot complete a employment application. A sad state that Democrat Unions have us in. A sad State as well.
We can divide the State into West and East California.
We can pray for our once great Golden California.
wedding dresses | 11.14.11 @ 3:07AM
There is no way to slowly elide into reform. The government employee unions have bankrupted all that they have touched. The people have to say, Enough, and refuse to fund them any more. Nothing else will do.
cowgirl| 11.14.11 @ 11:38AM
California - the Stupid State or the Lindsay Lohan State. Take which one you like. Both describe California to a tee.....