Point of View
Sen. Bill Emmerson
Posted: 08/04/2012 07:16:41 AM PDT
It’s been almost 10 months since Gov. Jerry Brown revealed his 12-point pension plan, and Californians are still waiting on the Legislature to pass public employee pension reform. While legislative Democrats continue to assert that they’re serious about enacting reforms to address our unsustainable pension system, their actions tell a different story.
In January, the governor challenged the Legislature during his State of the State address saying, “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.” Republicans responded to his challenge several months ago by introducing Senate Bill 1176 and Senate Constitutional Amendment 18, which reflects the governor’s 12-point pension plan word for word. Even prior to the governor’s call for action, Republicans have long sought reforms to California’s public employee retirement system. Last summer a group of Republican senators and I put forth Senate Constitutional Amendment 13, a reform measure that would control pension costs and end abusive practices.
The reform proposals put forth by Republicans include a hybrid between the traditional defined benefit pension and the 401(k)-style defined-contribution plan. This would require employees to contribute more toward their retirement, but still guarantee a minimum level of benefits. Pension spiking – the practice of artificially inflating an employee’s final compensation to maximize retirement benefits – would end along with double-dipping so an employee cannot collect a pension while simultaneously earning a government salary. In addition, pension benefits would be calculated based only on an employee’s salary rather than include overtime, unused leave, car allowances and other perks.
Unfortunately, Democrats responded by delaying action and have refused to set both SCA 13 and the governor’s pension plan for a public hearing. In fact, Republicans even made a motion on the Senate floor to vote on the governor’s pension proposal and Democrats opposed it and ran out the clock, thus blocking this crucial reform.
As a result, Californians continue to wait.
Recently the California Public Employees’ Retirement System (CalPERS) announced that its investment earnings have been much lower than our pension fund requires. While CalPERS projected a 7.75 percent return on its investment, the reality is that it only earned a return of 1 percent for the 2011-12 fiscal year. Given these numbers, it’s clear that investment earnings alone will not sustain our pension system, but rather reforms are needed to protect taxpayers from rising costs. These are facts that Democrats can no longer choose to ignore.
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