June 4, 2015
- Reformers, unions to square off
- Two former city officials sponsor measure
- Are pension costs cutting vital services?
California’s seemingly endless debate over public employee pensions may be approaching a climax.
The state’s voters will be asked to decide whether, as naysayers contend, pensions are too generous, forcing ever-higher pension trust fund contributions that are “crowding out” vital public services.
Two former city officials who fought local pension battles, San Diego Republican Carl DeMaio and San Jose Democrat Chuck Reed, filed a reform measure for the 2016 ballot Thursday, requiring voter approval for local pension enhancements.
Even before their announcement, the union-backed Californians for Retirement Security denounced the two as fronts for out-of-state right-wingers, indicating the pension battle will be loud and expensive.
The debate dates back 30-plus years, to when a union-backed ballot measure authorized the California Public Employees’ Retirement System to shift investments from ultra-safe bonds into potentially more lucrative, but also riskier, investments, mainly in stocks but also real estate and “private equity.”
Unions hoped that higher investment returns would finance higher pension benefits. For years, it seemed to work as they intended.
The effort culminated in 1999 with a huge pension benefit increase on assurances from CalPERS that high-flying investments would pay for them. But when recession struck a few years later, CalPERS lost tens of billions of dollars, forcing it to raise mandatory “contributions” from state and local governments to offset the losses and enhanced benefits.
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