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Action slow so far on Brown’s state employee pension reforms

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POSTED April 22, 2012 6:07 p.m.

SACRAMENTO (AP) — It's been six months since Gov. Jerry Brown put forward his proposals to make the public pension system more affordable, yet action on his 12-point plan has been nearly imperceptible.

That has led Republican lawmakers to accuse the Democrats who control the Legislature of stalling. Democrats acknowledge the slow pace, yet say they are making progress and intend to enact reforms before the session ends in August.

"It's not as fast as I would like, but it's complicated," Senate President Pro Tem Darrell Steinberg, D-Sacramento, said this week during an appearance before the Sacramento Press Club.

He said Democrats have an obligation to deliver pension reform, particularly as they will ask voters in November to approve hikes to the income and sales taxes. But he also said they have "a different take" on parts of the governor's plan.

Brown's reform packaged called for increasing the retirement age to 67 for new, non-public safety employees and having local and state government workers pay more toward their pensions and retiree health care. Among other changes, the governor would put new workers in a hybrid plan that includes a 401(k)-style vehicle.

Frustrated that Brown's reform package had not been translated into individual bills, Republican lawmakers earlier this year did it themselves. They submitted a legislative package that copied Brown's 12-point plan and asked that it be heard by the Conference Committee on Public Employee Pensions, which has held five hearings throughout the state reviewing retirement benefits for public employees.

Sen. Mimi Walters, R-Lake Forest, criticized the hearings that have taken place so far, saying they have focused on how the state's two pension systems operate and receiving updates on local government pension proposals.

"It has been more fluff and not so much substance," she said.

Walters said the Legislature needs to enact meaningful pension reforms this year, as Brown has requested, for Democrats to have credibility when they ask voters to approve higher taxes in the fall.

Like public pension systems across the country, the retirement benefits offered by the state and by California's cities, counties and school districts have in many cases far outstripped the funding needed to pay them.

Pension systems have unfunded liabilities owed to future retirees in the tens of billions of dollars, and critics say many local governments are being forced to cut public safety, parks, libraries and other services to pay generous pension and retiree health care costs.

The California Public Employees Retirement System, the nation's largest public pension fund, runs a $235 billion fund for more than 1.6 million state employees, non-teaching school employees, local government workers and their dependents. The system has an unfunded liability of around $85 billion.

The $144 billion California State Teachers' Retirement System manages a fund for more than 600,000 active and retired teachers and has $64.5 billion in unfunded liabilities.

Brown's administration has estimated that his proposed changes would reduce the state's contributions by $4 billion to $11 billion over the next 30 years if his plan is implemented. Other government entities, such as courts, school districts, cities and counties, would see their own savings.

But CalPERS found that the governor's hybrid plan may not significantly reduce costs for the state even while it would lower benefits for new workers and shift more of the risk to employees. The pension fund analyzed the governor's plan at the request of the legislative conference committee.

Brown, a Democrat, released his plan in October and asked the Legislature to tackle the issue. Senate Republicans unsuccessfully urged Brown to call for a special legislative session at the end of the year.

In February, GOP leaders in the Senate and Assembly announced a package of bills identical to the Democratic governor's proposal. This month, they followed up by sending letters to the governor and Democratic lawmakers, urging a special committee on public employee pensions to take up the governor's plan.

"If you fail to allow a vote on the governor's pension reform proposal in committee, you will be denying all Californians the opportunity to vote on the bipartisan reform plan that our highest elected state official believes is necessary to begin to address the public pension crisis," wrote Walters and Senate GOP leader Bob Huff of Diamond Bar.

Brown said he isn't frustrated by the lack of progress in the Legislature, saying serious negotiations don't happen until June, when the annual budget is debated.

"I keep pushing it," Brown told reporters earlier in the week.

Four bills introduced by Republicans would enact the governor's 12-point pension reform, although no hearings have been set for them. They include:

— SCA18 and ACA22, which would establish a hybrid pension plan for new hires, among other changes.

— SB1176 and AB2224, which would stop employees from purchasing credits to inflate their pensions.

Individual Republicans also have introduced several of their own reform efforts.

Assemblyman Cameron Smyth, R-Santa Clarita, has AB1649 and AB1681, which would require public employees to forfeit retirement benefits earned if they commit a felony. His office said his bills could be heard by the Assembly Committee on Public Employees, Retirement and Social Security as early as April 26.

And SCA13 by Sen. Anthony Cannella, R-Ceres, would make sweeping changes for new employees, such as banning retroactive pension increases, limiting benefits and requiring contributions to retirement health care. The bill is not expected to get a hearing.


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