Roberti, Unions Stall Pension-Funds Bill

Election-year politics and opposition by public employee unions prevented the speedy passage Thursday of a bill sought by Gov. Deukmejian and the Legislature that would free them to use about $300 million from the Public Employees’ Retirement System pension fund to help balance the proposed state budget.

Deukmejian had wanted the Senate to act on the pension fund transfer Thursday, less than 24 hours after directors of the $37-billion pension fund approved the budget-balancing maneuver and fired a top state official who opposed the action.

But Senate President Pro Tem David A. Roberti (D-Los Angeles), an ally of the public employee unions, adjourned the upper house for the weekend after state labor groups organized an overnight telephone and leaflet campaign to block the legislation.

Getting Unions’ Side

Roberti said he wanted to give the unions a chance to be heard. “They want a hearing. I intend to give them a hearing,” he said.

Union leaders said they feared that the transfer of funds, which they called a “raid” on their retirement system, would create a temptation in future years for the governor and Legislature to look to the retirement system whenever they ran short of funds for other state programs.

And they pointed with alarm to the sudden firing of pension fund executive officer Sid McCausland, who argued that the budget-balancing maneuver might be illegal. The firing occurred Wednesday, just minutes after retirement board directors approved the transfer of funds.

Identical Split

In all three of its key votes Wednesday--one on whether to fire McCausland and two separate votes on the fund transfer--the pension board was split 7 to 6, with the majority votes cast by elected officials or appointees of elected officials, and the six no votes registered by board members representing state workers.

The transfer approved by the pension board was more than $400 million. The chief beneficiary would be the state, which would save about $300 million by reducing its contributions to the employee pension fund for the coming fiscal year. The rest of the reduction would be in the form of lowered contributions by other government entities, mainly county and local governments.

California State Employees’ Assn. President Leo Mayer, a leader of the organized opposition to the bill, said his union, which represents about 120,000 active and retired state workers, was also preparing a legal challenge to the action and said a suit would be filed in the next few days.

1982 Court Case

Faced with a similar situation in 1982, the union went to court and won a suit forcing the state to return funds it took from the retirement system to balance the budget. Union leaders said they expect a similar outcome this time.

Mayer said the unions planned an all-out fight to defeat the action and would use “whatever force we can, including giving or withholding volunteer and financial support in the general election.”

“Opening the door to this kind of raid could be disastrous to our pension system,” he said.

Roberti was also feeling heat from at least one member of his caucus. Sen. Leroy Greene (D-Carmichael), who faces an especially tough reelection fight in November and represents thousands of state workers in his Sacramento-area district, called the action “a frustrating outrage.”

Uphill Battle Expected

Despite the rhetoric, opponents of the fund transfer acknowledged that they faced an uphill fight.

The budget-balancing scheme was agreed to last week by Senate Democrats when they approved a $37.4-billion version of Deukmejian’s budget, which is for the new fiscal year that starts July 1. The governor is in the final stages of working on the budget.

Pressure from the governor came in the form of a visit to the Senate by Deukmejian’s chief of staff, Steven A. Merksamer. He and other Administration officials had a closed-door meeting with Roberti and several lawmakers in the Senate leader’s office just off the Senate floor.

Lawmakers said Merksamer told them that if they did not approve the bill, the governor would cut $300 million from the budget, in addition to $300 million in proposed spending he already planned to veto.