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Pension Overhaul Efforts Face Big Hurdles

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(Sacramento, CA)
Monday, August 1, 2011
Of all the Republican priorities during state budget negotiations this year, the issue that drew the most heat might actually face some of the longest odds against dramatic change.  We're talking about pensions -- and in the latest topic in our "Beyond the Budget" series, we examine the challenges to a major pension overhaul both inside the Capitol building and out.


Democrats control the Capitol - so inside the building, they control the pension debate.  Senate Leader Darrell Steinberg says Democrats are committed to reforms:

Steinberg: "Public pensions need to be reasonable. And where they're not reasonable, we need to deal with that. And that's what we'll do."

Steinberg wants to deal with abuses like spiking and double-dipping.  He's also looking at the practice of buying "airtime," where public employees can purchase pension credits for years they haven't worked.  He doesn't support a complete overhaul - nor do labor leaders like Terry Brennand with the Service Employees International Union.

Brennand: "Messing with the formulas and the retirement age that creates a one-size-fits-all formula that retires these people into poverty is not going to be something we're going to endorse."

Brennand expects Governor Jerry Brown and legislative Democrats to unveil a pension bill soon after the summer recess ends in mid-August.  He says unions might not like everything in that bill, but says he expects a compromise.  A compromise between Democrats and unions probably won't win Republican support.  Just ask GOP Senator Mimi Walters whether she thinks the pension changes likely to pass the legislature are enough:

Walters: "No, they're not enough. We have to take a look at the complete package of pensions and where we need to make reform."

There is a Republican pension plan inside the Capitol, and it comes from the "GOP 4," the senators who worked on the failed budget deal with Governor Brown.  It would create a "hybrid" 401k-style program, impose a pension cap and allow changes to future unearned benefits of current public employees - all intended to drive down taxpayer costs.  That plan is likely dead on arrival in the legislature, and GOP Senator Tony Strickland says he doesn't think the governor will support it either.

Strickland: "If he was going to do meaningful pension reform, he coulda got it done in the budget process.  Clearly, it says to me, that's not gonna get done in the legislature.  We need to do it outside the building."


Niello: "Well, outside the building would be an initiative."

Roger Niello is a former Republican Assemblyman, and he says passing an initiative won't be easy.  Niello knows because he tried.  He submitted a pension initiative earlier this year anticipating a potential special election if a budget deal fell through, but …

Niello: "I didn't find an abundant interest in funding the election."

Gathering signatures and funding a campaign would cost millions of dollars.  And for all the heated debate, Niello says there just isn't a lot of money to support a pension initiative.  Groups that traditionally fund Republican measures aren't interested.

Coupal: "Not this cycle, not for 2012."

Jon Coupal runs the Howard Jarvis Taxpayers Association.

Coupal: "In future years, we may get to that point. But right now, we're not in a position to be the lead organization on pension reform."

Business groups don't see public pensions as an immediate threat.  And then, Niello says, there's the intimidating prospect of union spending...

Niello: "… which is another thing that would argue perhaps against some people dedicating significant resources in its favor.  You spend a lot of money on a losing cause when you don't perceive it as being at the immediate crisis stage."

Dan Pellissier isn't fazed.  He runs a group called California Pension Reform, and he's working on an initiative that would place a hard cap on government contributions to pension plans.  Pellissier acknowledges that raising money won't be easy, but he's guaranteeing it'll make the November 2012 ballot.

Pellissier: "We're getting a lot of interest from good, reliable Republican voters and some of the key Republican folks in the state. And we are confident that we will have the money to execute our campaign."

But there's another hurdle - the lack of unity among reformers.  Pellissier downplays any idea of a rift, but there are several efforts out there - and not everyone is working together.  Niello says that must change:

Niello: "Once there is monied interests participating, they will quickly shy away if there's significant rifts."

Especially with union leaders like the SEIU's Terry Brennand vowing to spend …

"…whatever it takes."
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