Shocking pension reform plan would also hurt middle class

August 31, 2012

Viewpoints: Shocking pension reform plan would also hurt middle class
By Dave Low

What's most shocking about the pensions deal struck by the governor and Legislature this week is not that it represents the biggest rollback of retirement benefits in California history. It's not that the proposal contains only cuts and takeaways. And it's not that it asserts unprecedented authority to circumvent the collective bargaining process.

Each of those things is true, but what is most shocking is that a Democratic governor and a Democratic Legislature have allowed pressure and distortions from the right wing to force them to enact legislation in a way that will irreparably harm teachers, firefighters, police officers and our state's economy.

Democrats purport to work for the middle class, to help average working families be successful. Instead, this pension-gutting proposal undermines the future of the middle class in California and will damage our economy at a time when we all should be focused on creating jobs, not eliminating them.

The plan goes above and beyond what Gov. Jerry Brown proposed earlier this year. It goes above and beyond the mandates Republicans want to enact. In fact, it rolls back government employees' retirement benefits to levels not seen in California since Ronald Reagan was governor.

One of the plan's egregious flaws is that it allows employers to unilaterally impose increases to current employees' pension contributions – forcing them to pay half of the costs of their retirement benefits. That kind of change would have been unconstitutional to order outright – and there are Supreme Court cases saying so – so this plan finds a loophole by requiring the increase to be worked out through collective bargaining. However, after five years, if negotiated increases haven't been to employers' liking, they can impose one outright.

The plan also irrationally increases the retirement age for most public employees to 67, failing to consider the needs of various physically demanding jobs. Should 67-year-olds be handling heavy equipment such as jackhammers? Should a 67-year-old be on the other line of an emergency call in the stressful and high-intensity role of a police and fire dispatcher? What about a 57-year-old firefighter called upon to climb into the second-story window and rescue people from fires?

Coming on the heels of several years of layoffs, pay cuts, and increases to health care costs, these mandates will make it more difficult to keep experienced teachers in our classrooms and quality police officers on our streets.

There have been zero increases to public employees' retirement benefits for 13 years. The most recent negotiated increase, approved in 1999, was repealed under Gov. Arnold Schwarzenegger, so it actually has been even longer since California public employees have seen any increase in their benefits. And it is clear from the recent legislative track record that none of these benefits will be restored.

Public workers have negotiated in good faith to be part of the solution during these difficult economic times. Throughout the state, workers have already agreed to increase their own contributions to their retirements and implement a two-tiered pension formula. Government employees in hundreds of California cities have forgone raises, endured pink slips and taken on increased workloads.

What's more, public employees agree the pension system needs common-sense reform. For example, it's clear that loopholes need to be closed to prevent abuses of the system, and the rare cases of gold-plated pensions need to be stopped.

However, no Californian ought to support harming average working families and damaging our fragile economy. But, by destabilizing pensions, that's exactly what these over-the-top rollbacks will do.

A study commissioned by the California State Teachers' Retirement System showed that for every $1 invested in pensions, the state's economy sees $6.71 in benefits. According to the California Public Employees' Retirement System, payments to retired employees generated $26 billion in economic activity in a single year, 2010, which supported more than 90,000 jobs in our state. The plan concocted by the governor and Legislature puts all that at risk.

Many elements of the pension plan announced by the governor and legislative leaders are shocking. But most alarming is that the plan not only hurts the teachers, safety officers and other government workers who serve the public, but it also injures our economy and strikes a blow to the middle class.

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