SACRAMENTO - The proposed ballot measure authored by former San Diego City Council member Carl DeMaio and former San Jose Mayor Chuck Reed would eliminate constitutional protections for the retirement security of both existing and future public servants, according to a letter to Assemblymember Rob Bonta (D-Oakland), Chair of the California Assembly's Committee on Public Employees, Retirement, and Social Security.
CalPERS CEO Anne Stausboll also raised several other concerns about the impact of the proposal in her letter to Bonta in addition to the measure's elimination of the "California Rule," which protects the benefits that employees earn the same benefits they receive when they start their jobs for their entire career. They include:
- Requiring the closing of all CalPERS defined benefit plans as of January 1, 2019 would "present huge administrative challenges, requiring new investment strategies and actuarial assumptions";
- Making death and disability benefits "almost impracticable"; and
- Creating issues with the IRS that "could threaten the system's tax exempt status."
"The initiative raises legal and administrative issues," wrote Stausboll. "Its imprecise language increases that complexity..."
Last week, CalSTRS, the state's retirement system for teachers, made similar comments. "An additional consequence is that CalSTRS' cash flow would become increasingly negative, impacting CalSTRS investment decisions," noted the CalSTRS analysis.
The state's Legislative Analyst's Office also issued its report last week, noting the measure would create "significant uncertainty" for both pension funds.
"It is clear that this measure would wreak havoc on our state's pension systems that provide retirement security for millions of Californians," said Assemblymember Bonta. "It goes too far by attacking the benefits that existing firefighters, teachers, and school employees have been promised and undermining the financial stability of our pension funds."