Jon Ortiz

The State Worker
By Jon Ortiz
July 29, 2015

  • Plan lowers cost of traditional pension plans, retiree health care
  • Creates ‘offsetting’ costs to close pension plans, pressure to increase pay
  • Voter approval for compensation will mean ‘different outcomes at the bargaining table’

Legislative Analyst Mac Taylor said this week he doesn’t know what would happen if a new public pension ballot proposal becomes law.

“There is significant uncertainty as to the magnitude, timing, and direction of the fiscal effects of this measure and its effects on current and future governmental employees’ compensation,” Taylor wrote in a Tuesday letter to Attorney General Kamala Harris. “… The magnitude and timing of these effects would depend heavily on future decisions made by voters, governmental employers, and the courts.”

The assessment, co-signed by state Finance Director Michael Cohen, will soon appear on petitions for a proposed ballot measure that aims to upend the way public pay and benefits are set by requiring voters to weigh in.

The proposal asserts California voters have the right via initiative and referendum to determine state and local government employees’ pay and benefits. Employees hired Jan. 1, 2019, or later would not be allowed to join existing pension plans unless voters approved continuing those plans.

Voters also would have to approve new plans, according to the analysis.

“In other words … the measure closes existing governmental defined benefit pension plans on January 1, 2019,” the analysis states.

Government employers could pay no more than half the cost of retirement benefits for those new employees, including future unfunded liabilities. So once enacted, the proposal would probably significantly cut pension and retiree health costs for state and local agencies.

To read expanded column, click here.