Governor Brown Says His Pension Deal Pushes Labor Back 30 Years

Wednesday, August 29, 2012
Governor Jerry Brown and his 12 points. (photo: Southern California Public Radio)

Governor Jerry Brown and key lawmakers reached a deal on pension reform Tuesday that the governor says “will take public retiree benefits back to below where they were when I was governor the last time.”

The Legislature is expected to vote on a finished bill by the end of the week that is expected to save between $18 billion and $30 billion over 30 years.

The deal roughly follows a 12-point plan introduced by Brown a few months ago, minus one of its spikier points; there will be no hybrid plan that would have compelled workers to forsake part of their conservative and relatively risk-free, defined-benefit pension and gamble in the markets via 401K-like accounts. Republicans were so enamored of Brown’s proposal, they introduced it as legislation

But workers will have to fund a much higher portion of the benefit; the retirement age will be pushed back around a decade; and benefits will be capped at $110,000 a year ($130,000 if you are a teacher, firefighter or law enforcement without Social Security). Brown characterized the agreement as a corrective to years of over generosity and wrongheaded thinking about retiree benefits. That resonates with conservatives who feel greed, corruption and political manipulation of unions led to the projected shortfalls that pension funds have recently incurred.

Brown has said that reaching an accord on pensions, and convincing the public government was serious about solving its debt and budget problems, was critical to passage of his tax proposition on the November ballot.

Organized labor and its supporters think they are being scapegoated for a situation caused by Wall Street’s excesses that crashed the economy in 2008 and turned a lot of reasonable debt holdings into actuarial time bombs. Public employee groups described the accord as a further rolling back of the middle-class, which has shrunk from 61% of the country in 1970 to 51% now, and an abrogation of labor deals reached through honest collective bargaining. Workers often forego salary demands in exchange for benefits during negotiations.  

Dave Low, chairman of union coalition Californians for Retirement Security, said there are discussions about whether to challenge the deal in court.

–Ken Broder


To Learn More:

California Leaders Strike Public Pension Reform Deal (Reuters)

California Gov. Jerry Brown Unveils Pension Compromise that Caps Benefits (by Steve Harmon, Bay Area News Group)

Conservative Activists, Unions Bash Jerry Brown's Pension Plan (by Anthony York, Los Angeles Times)

Unions Blast California Public Pension Reform Plan (by Jon Ortiz, Sacramento Bee)

Public Employees Loud in Criticism of Pension Overhaul by Democratic Allies (by Patrick McGreevy, Los Angeles Times)

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