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Analysis: Jerry Brown’s Pension Reform Proposal Will Displease Both Sides

| October 27, 2011
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Gov Jerry Brown today released a 12-Point Pension Reform Plan (pdf). Initial reviews from labor: thumbs down.

Under the proposal, new state workers would move to a hybrid system combining guaranteed benefits with a 401K-style . It would also raise the retirement age from 55 to 67 and require that both new and existing employees pay at least 50 percent of the annual cost of their pension benefits.

Brown said today he wants to put the plan before voters in November, 2012.

Analysis from KQED Sacramento Bureau Chief John Myers:

Brown’s proposal is obviously only a starting point for negotiations with the Legislature. And from the sound of things so far, it's a tough sell with the state's politically powerful labor unions. In particular, his proposal for a hybrid system combining traditional pension benefits with a 401(k) style package is drawing fire.

The real question may be whether this plan is enough to solve the funding woes of the state's two pension funds. The governor's own advisers told reporters today that while the proposal offers "opportunities" to downsize the so-called 'unfunded liability' of CalPERS and CalSTRS, it does not guarantee that those pension funds will be able to get out of the long-term hole they're in. Instead, advisers say it’ll keep the hole from getting deeper.

And that's going to be a tough sell to those most adamant that government roll back pension benefits — not just for future workers, but for current workers who've yet to retire. In other words… this proposal is, for now, getting hit from all corners.

Cy Musiker today talked to Jon Ortiz, who writes the Sacramento Bee’s State Worker blog, about the proposal. Listen here:

Update 6:31 p.m. As reported on The State Worker, Yvonne Walker, president of the biggest union of state workers, SEIU Local 1000, sent this letter out to members today:

Dear Local 1000 Members:

Earlier today, Gov. Jerry Brown released his 12-point pension reform plan that he hopes will shape the structure of California’s public worker pensions for decades to come.

SEIU Local 1000 has been the leader in pension reform, spending several years pushing to end abuses and special deals while protecting the men and women who make this state run. It is a fight our leadership and members will continue to lead until a fair solution can be reached.

We also know the economic crisis has jeopardized the future of millions of workers who are being agitated to target public sector workers rather than the true culprits–Wall Street bankers and financial institutions.

Our vision for a just society should include a secure retirement for all workers.

I have included below the key points we are making to the media and the public; I encourage you to share and discuss these with your colleagues, friends and family. I am also including a link to the governor’s 12-point pension reform proposal.

And, I offer this promise to you: together we will continue to work on achieving a secure retirement for all Californians.

Sincerely,
YVONNE R. WALKER
President

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Category: Government, Labor, State Budget

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