Votes on public pensions fuel calls for statewide change
The State Worker: Votes on public pensions fuel calls for statewide change
By Jon Ortiz June 7, 2012
Tuesday's landslide pension reform votes in San Diego and San Jose were just the early tremors in what could become a public pension earthquake by the end of this month.
The big question: What does this mean for pension reform legislation at the Capitol?
Gov. Jerry Brown, who has floated a 12-point pension reform plan, told a San Francisco Chronicle reporter on Wednesday that the vote in liberal San Jose was "a very powerful signal" that pension reform is "an imperative" that he's putting "at the top of the agenda." Brown thinks pension reform will make his tax initiative more palatable to voters in November, although he hasn't talked about it much until now.
Pension reformers hailed the news that supermajorities in two of California's biggest cities embraced pension benefit rollbacks for current employees – a legally murky idea – and not just future workers. It's a sign, they said, that the public is tired of feeding pensions while public services go to seed.
"To me, it was a brutal, brutal night for unions and the status quo," said Republican strategist Aaron McLear, referring also to a failed effort to recall Wisconsin Gov. Scott Walker in a race considered a referendum on his decision to take on public employee unions.
Meanwhile, the unions downplayed Tuesday's results. Dave Low, chairman of union coalition Californians for Retirement Security, noted San Diego's Proposition B supporters outspent their opponents 8 to 1.
Why the disparity? The unions saw the polling and didn't want to spend on a lost cause. They're also saving up for an expected donnybrook over a November ballot measure that ends payroll deductions for political spending, the unions' primary source of funding.
They also figured the real fight will be in the courts. Unions filed lawsuits on Wednesday to block the San Jose reforms. "And there are more to come," said attorney Harvey Leiderman, who represents two of San Jose's civic retirement boards.
Headlines in the next few weeks will further crank up the volume on calls for public pension changes.
Barring an epic market recovery this month, CalPERS, the nation's biggest public pension fund, will close its fiscal year on June 30 with a loss. It ended last year with $237 billion in assets, $13 billion more than its value when the markets closed Monday.
On July 1, pension costs for school districts in CalPERS will go up a collective $137 million per year. That's because the fund decided in March to lower its investment return forecast from 7.75 percent to 7.5 percent. Cities, counties and other municipal agencies will face higher costs next year.
Meanwhile, a special committee of lawmakers is working on what Senate President Pro Tem Darrell Steinberg promises will be "substantive" pension legislation. Tuesday's votes, Brown's re-engagement and the rough pension fund waters ahead are converging at a crucial time in the public debate.