California Republicans Propose Curbs on Public Pension Costs

Wednesday, 23 Feb 2011 06:48 AM

 

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California government unions would lose the power to negotiate pension benefits and new employees would be forced into defined-contribution plans under measures proposed by two Republican lawmakers from Orange County who seek to rein in the state’s spiraling personnel costs.

Traditional pensions would be eliminated for newly hired state workers in one bill offered by Senator Mimi Walters of Laguna Niguel. Fellow Republican Allan Mansoor, an Assembly member from Costa Mesa, proposed an end to collective bargaining for retirement benefits.

“Our pension systems are massively underfunded and unsustainable,” Walters, 48, said in a statement. “We must act now to ensure that our state employees can effectively plan for their retirement,” she said.

The measures touch on themes that have spurred demonstrations in Wisconsin, Ohio and Indiana as government unions protest moves to limit their power and raise costs for their members. Pension payments and retiree benefits cost California taxpayers $5 billion a year, up from $1 billion in fiscal 1999, according to one of Walters’s bills. It projects those costs to jump to $15 billion annually in a decade.

The cornerstone of her pension proposals is a bill to replace traditional defined-benefit pension plans with 401(k)- style retirement funds for new government workers, Walters said. “We must first stop the bleeding, which is why it is crucial that we establish a viable defined-contribution plan for new employees,” she said.

Since he hadn’t seen the bills from Walters and Mansoor, Jim Zamora, a spokesman for Service Employees International Union Local 1000, said he couldn’t comment when reached by telephone. The union is the state’s largest for government workers, with about 95,000 members.

First Step

Taking unions out of the process of negotiating pension benefits is the first step toward broader changes to control costs, Mansoor, 46, said by telephone. The former Costa Mesa mayor said his bill is narrower in scope than those in Ohio and Wisconsin, which would do more to limit union power.

“I’ve been trying to address pension benefits for quite a while,” Mansoor said. “It’s a huge part of our budget deficit here in California. I appreciate what public employees do, but we’ve gotten locked into these unaccountable costs.”

Walters and Mansoor introduced their pension-related bills last week, just ahead of a deadline to be considered in the current legislative session. Another measure she proposed would raise the minimum retirement age to 55 from 50 for police and firefighters.

Earlier Attempt

Former Governor Arnold Schwarzenegger, a Republican, withdrew a proposed ballot measure in 2005 that would have set up defined-contribution pension plans for government workers after an outcry from police and firefighters. Democrats control both legislative chambers in California and Schwarzenegger was replaced by Democrat Jerry Brown, a former governor who approved collective bargaining for state employees in 1976.

During a press briefing Feb. 18, Brown showed little interest in limiting government unions’ negotiating power as he grapples with a projected deficit of about $25 billion through June 2012.

“I hope in California that we can demonstrate that both management and working people in the public sector can rise to the occasion and do what’s in the public interest,” Brown told reporters who gathered in his Sacramento office.

“I don’t think we have to go the route of eliminating participation,” Brown said. “I think in a democracy you want more participation, not less.”


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