Voters Asked to Put a Lid on Ex-Officials’ Pensions
For the first time, California voters this year have an opportunity to clamp constitutional ceilings on the pension benefits of ex-public officials, some of whom are receiving fatter checks in retirement than their successors receive in present-day salaries.
Proposition 48 on the June 3 ballot would restrict future retirement benefits of state legislators, judges and statewide officeholders such as the governor. Another ballot proposition aimed at November would clamp lids on present retirement benefits.
Under Proposition 48, the upper limits for those retiring after Dec. 31, 1986, would be determined by a formula that allows ex-officeholders the higher of two options:
They could receive a pension equivalent to the top salary they received during their term in office; or they could receive a pension up to the limit of the salary being paid to the present occupant of their old job. They could not receive more, as is now the case with several ex-officials.
The proposed constitutional amendment was approved overwhelmingly by the Legislature as the first of two parts of a retirement reform package introduced by Sen. Wadie P. Deddeh (D-Chula Vista).
“While we do not wish to deny anyone an honest pension, we felt something had to be done before it gets out of hand,” Deddeh, a former college political science teacher, said in a telephone interview. “I’m trying to put a stop to unconscionable and errant pensions. This is our time. The people have the power under our system to do it.”
Proposition 48 would apply only to officials who retire after Dec. 31, 1986, and would not affect present pensions.
A second Deddeh constitutional amendment would affect some officeholders who already have retired and are collecting pensions far in excess of the salaries they made when they held public office. This measure, which has passed the Senate and is pending in the Assembly, appears headed for the November ballot.
Of the two alternatives for setting limits in the measure before voters on June 3, the ceiling tied to the pay of present officeholders would more often be the greater figure and thus more often apply to retirees. This is because incumbent salaries are adjusted upward annually, largely to keep pace with inflation.
Under current law, state legislators (who make $33,732 a year) can begin their retirement with up to two-thirds of their final salary if they have 15 years of public service.
Individuals elected to statewide office, such as the governor or state controller, can start receiving pension benefits up to 60% of their final salary if they have 24 years of public service; or, more likely, 40% pegged to eight years of public service.
Both retired legislators and statewide officeholders then receive annual pension increases tied to the consumer price index, a national inflation barometer.
But salaries paid to current legislators cannot increase by more than 5% a year. So when the annual inflation rate runs higher than 5%, pensions paid to retired legislators could catch up with--or, indeed, pass--salaries received by incumbents.
This is a basic inequity that Proposition 48 is attempting to correct, according to Deddeh.
“We have the power to prevent public officials from receiving retirement benefits that are greater than the salaries of our current officeholders,” Deddeh says in his ballot argument.
Judges’ retirement benefits, unlike the above two groups, have a continuing direct salary link with incumbents, whose pay ranges from $70,436 for a municipal court judge to $99,362 for the chief justice of the state Supreme Court.
Under this formula, a judge’s pension cannot exceed 75% of the salary of the judge currently holding the retiree’s seat. And, in tandem, both current salaries and pensions increase by the same percentage--pegged to increases in state employee salaries.
This calculation would not change under Proposition 48. What the ballot measure would do would be to write the current statutory upper limit for judges into the state Constitution, thus making it more difficult to change.
Although there is no argument against Proposition 48 in the Ballot Pamphlet, the measure is opposed by the California Taxpayers Assn., a Sacramento-based, business-oriented tax and lobbying group.
“It’s like no lid,” charged Rebecca Taylor, a senior research analyst for the association who covers public employment issues. “Legislators’ salaries could at least double” and pensions could rise with them, she said. “It’s not pension reform.”
The association, Taylor said, supports limiting retired legislators’ pensions to their highest income while in office. But tying retirement benefits to 100% of the incumbents’ salaries “is no limit at all,” she said. “That is absolutely the whole issue.”
Deddeh agrees that the formula might allow the doubling of legislator pensions. But, he said, if he had attempted to clamp a ceiling on pensions linked only to a legislator’s highest salary while in office, “I wouldn’t have got 10 votes.”