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Some Pension Reform Better Than None?

Pending deal falls far short of what the governor proposed

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    NEWSLETTERS

    With the clock running out on this year's legislative session, Democratic leaders at the Capitol are finally ready to move on a pension reform plan.  The quickly-hatched plan is facing votes before the week is up.

    You have to ask, what's the rush?  After all, Gov. Brown unveiled his own 12-point reform plan in October of last year.  That plan involves raising the retirement age to 67 for state workers, and moving to a  hybrid system that involves a 401k-style investment plan.

    The answer is that Brown and the Democrats want, and need, some sort of accomplishment when it comes to reining in pension costs if they're going to ask voters to approve Prop 30,  a package of temporary tax hikes.

    The dynamics of this are complex. The governor's strongest ally,  labor, is pushing for virtually no change, arguing that any pension changes should be handled at the bargaining table. Republicans and business groups are pushing just as hard for comprehensive reform in the face of worries about an unfunded liability.

    The governor has to prove that he's willing to push reforms through, while also protecting what he has called "retirement security" for tens of thousands of workers.  Voters are not going to be willing to consider the taxes unless Brown can show that he's made progress in defusing this fiscal bomb.

     The agreement being hammered out is falling far short of Republican expectations.  It does not include a 401k-style element, known as defined contribution.   It does include higher retirement ages for new employees, a cap on benefits tied to salary, and an effort to crack down on abuses like pension "spiking".

    Eleventh-hour deals are always cause for squeamishness.  But with the legislative year due to expire at midnight Friday, Gov. Brown will have a lot of motivation to settle for reform that's far short of the mark he originally set.

    Author Kevin Riggs, an Emmy-winning former TV reporter in Sacramento, is Senior Vice President at Randle Communications.

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