HomeMy WebLinkAbout06.a.1) Update on pension reform legislation6-a-0
Central Contra Costa Sanitary District
December 9, 2011
TO: HONORABLE BOARD OF DIRECTORS
VIA: JAMES M. KELLY, GENERAL MANAGER
FROM: RANDALL M. MUSGRAVES, DIRECTOR OF ADMINISTRATION 9AA
MICHAEL SCAHILL, COMMUNICATION SERVICES MANAGERXQ-
SUBJECT: LEGISLATIVE COMMITTEE HEARING ON GOVERNOR'S 12 POINT
PENSION REFORM
The bi- partisan Legislative Committee on Pension Reform met on Thursday, December
1 in Sacramento to review Governor Brown's 12 Point Pension Reform plan.
Committee members heard from Governor Brown, representatives from the
Departments of Labor and Workforce Development, and Finance; the Legislative
Analyst's Office; CaIPERS and CaISTRS; the University of California; the League of
California Cities; the California Special Districts Association; other employers.
The Governor's remarks gave few specifics of his plan, noting several times that while
his plan does not address the unfunded liability, it is nonetheless a good first step. He
argued that State workers must accept lower benefits to restore the State's financial
stability. That in turn would win over the confidence of the voters to approve certain tax
increases.
His representatives from Labor & Workforce Development and from Finance addressed
questions that had been submitted by the Committee in advance. These included:
• The proposed 50% contribution by employees to pensions will, of necessity, be
phased in through collective bargaining.
• The proposed Hybrid plan is still being designed. After Legislative approval, a six
month study on implementation would be instigated.
• Raising retirement age to 67 – comparable to Social Security's age – would apply
to new employees.
• The purchase of "airtime" is not a vested right (according to the Governor's
representatives) and would be eliminated for all current and future employees.
• Retiree Health, with vesting moved up to 15 years rather than the current 10 year
period, would apply to new employees.
• There would be no future retroactive increases in retiree health benefits.
Both representatives noted that the potential impairment of contract limitations would be
both a State and Federal constitutional issue. Changes to the State constitution would
go to the public vote as a ballot measure, and the representatives said that they
believed the 12 point plan would meet Federal constitutional requirements.
The next speaker was from the Legislative Analyst's Office who emphasized that it will
be legally difficult to make any changes to present employees' benefits. As to the
unfunded liability: the only fix must be increased "donations" by localities and the State
for decades. No near term savings are possible.
Testimony from representatives of CaISTRS, CaIPERS, the County Retirement System,
and the Special Districts Association all questioned the viability of a hybrid pension plan,
all agreeing that anything that impacts the vested interests of public workers will go to
court.
It is worth noting that Assemblymember Warren Furutani (D), author of this year's AB
340, called for more targeted solutions, focusing on high wage and pension earners and
cases of abuse without hurting "average" workers. "We can't keep lumping them all
together," he stated. "We need to break into pieces rather than look at one lump sum
where everyone is in the same situation."
Similar comments were made by the other Democrats on the panel.
There have been no dates or locations announced for any future Committee meetings.