Gov. Jerry Brown’s proposal to alter public pension benefits is courageous but legally dicey, and key pieces of it have not been fully developed, according to a new report from California’s nonpartisan Legislative Analyst’s Office.
The report praised the governor for offering “a bold starting point for legislative deliberations” on pensions. And it lauded Brown’s call to combine a 401(k)-style savings plan with the existing guaranteed-benefit system and raise the retirement age for most future public employees from 55 to 67. Those proposals would save the state millions of dollars down the road.
Brown, who announced his plan last month, also wants to require current workers to pay a larger share of their retirement costs. That, the report says, “is a legal and collective-bargaining minefield.… It will be very difficult, perhaps impossible, for the Legislature, local governments or voters to mandate such changes.”
Existing law protects current workers’ benefits, the report says.
The governor’s spokesman, Evan Westrup, responded to the report in a statement and did not directly address the criticism of the plan, saying only, “We welcome the LAO’s analysis as we move forward to achieve these critical reforms.”
Lawmakers rely on the analyst’s office for unbiased fiscal advice. Deputy Legislative Analyst Jason Sisney, author of the report, said that according to his office’s reading of state law, Sacramento and local governments are virtually powerless to make some of the changes Brown wants to save money in the short term.
“Pension costs for the state and many local governments are going to have to increase, in some cases by quite a lot,” Sisney said. “There’s just no way around that.”
That notion was challenged by Republican activists who have proposed two possible ballot initiatives to curtail public retirement benefits. Both would go further than the governor’s plan, asking current workers to pay much more toward their own retirement costs.
“I just fundamentally disagree” with the analyst, said Dan Pellessier, president of California Pension Reform, which is backing the two initiatives. “We’ve spent a lot of money with some of the best legal minds in the country to find out just how far we can go with current employee benefits, and what we’ve found is you can go a lot further than the conventional wisdom in California.”
Brown’s plan will be reviewed by a legislative committee on Dec. 1. It will be lawmakers’ first opportunity to publicly question administration officials about the plan, which drew a tepid response from Democratic lawmakers and union leaders when it was introduced.
The governor said he wants lawmakers to place a measure on the November 2012 ballot that would provide new rules for the more than 3,000 public pension plans in California. To do that, he would need a two-thirds vote of the Legislature.