Marisa Lagos and Wyatt Buchanan
Updated 10:15 p.m., Saturday, September 1, 2012
Sacramento –The pension deal Gov. Jerry Brown cut with Democratic lawmakers is expected to help solve some of the majority party’s short-term political problems, but it won’t fix the pension system’s long-term debt.
While the bill approved Friday could save the state $55 billion over three decades, according to CalPERS, estimates of the pension system’s long-term shortfalls range from $90 billion to $500 billion.
Unions criticized the overhaul for its cuts to retiree payouts, while business groups and others pushing for reform say it’s only a start and the state must do much more. Others, including some GOP lawmakers, ridiculed the plan as window dressing that could easily be reversed by lawmakers in the future.
The changes largely affect newly hired public employees while leaving many benefits intact for the current workforce. For example, most public workers hired after Jan. 1 will have to wait until age 62 to retire with full benefits, while those hired in 2012 or earlier can still retire at 55 with full benefits. Additionally, the bill imposes a maximum payout for new employees, while allowing current workers to keep their pensions.
David Crane, a Stanford lecturer and president of Govern for California, a nonpartisan government-reform group, said lawmakers need to take action on the pensions of current employees.
Crane, a vocal critic of the pension system, suggests freezing and guaranteeing the benefits current employees have earned to date and, in future years, increasing employee contributions and reducing cost-of-living adjustments.
That prospect is controversial – unions argue it is illegal – but when Brown announced the pension deal last week, he said actions in some cities could result in a court ruling that such changes are allowed.
He told reporters: “Pension law is not static. And there will be cases coming out of San Jose, San Diego and Stockton that may reshape pension law over the next several years. And if so, that will open new avenues for further changes.”
Those cities are looking at changes to benefits for current employees, with Stockton going that route because of bankruptcy and the others as a result of ballot measures passed in November.
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