We were heartened by this report in the Ventura County Star that pension spiking is now closer to the dustbin of California history. AB340, sponsored by Long Beach Democrat Warren Furutani, was approved yesterday by the Assembly's Public Employees, Retirement, and Social Security Committee. If it becomes law, government agencies will no longer be able to count excess payments on unused vacation, leave, sick or comp time, overtime pay, bonuses, housing allowances, severance, or vehicle allowances toward an employee's retirement. The bill would also prohibit agency "pension holidays". At least for the moment, public employee unions are supporting the bill.
But we were far more intrigued by this LA Times story on two pension reform proposals now taking shape in California. The California Foundation for Fiscal Responsibility has released an analysis of the proposals suggesting that both are better suited to getting the state's gargantuan unfunded liability under control than the half-finished musings Jerry Brown offered last month. One proposal, modeled on the federal government's retirement plan and endorsed by the state's Little Hoover Commission, would offer a small fixed payment each month along, a defined-contribution savings account with limited employer matching and Social Security, and lower healthcare benefits for early retirees. The second proposal would move state workers all the way into defined-contribution plans while capping employer matching at 9% of salary. Both proposals would reduce pension obligations to current workers by 40%, and would reduce payouts by 25% for those hired after 2011.
So get your popcorn ready. Backers of the second proposal are already working to submit it as an initiative to the Secretary of State this month, and hope to have enough signatures to get it onto a ballot near you in June 2012. And union thugs are already crying foul about "an attack on public employees". One can only expect them to defend their pensions in defiance of empirical reality until either serious reform becomes law or retired workers bankrupt the state.