Jerry Brown has just come out with a proposal to reduce public employee pensions throughout the state, and let me tell you it is a big smackdown to the unions.
As someone who spent several years studying the details of public employee pensions the level of cuts that he has proposed is very significant and gratifying. Pensions were the biggest sore spot for overextended California taxpayers and Brown has finally tackled this issue head on.
One wonders why he did not do this sooner, when he was trying to get his budget balancing plan that included extending tax increases last year. Many voters including myself were willing to support that if there were significant spending cuts first, and first on the list were overinflated pensions.
Republicans held the line and said, no tax increases only spending cuts, and that if we held out the cuts would come. The public went along with that in polls that were taken, and the vote for the taxes never happened. And now what they predicted has come to pass with this proposal of Brown's. The Republicans were right and deserve credit for holding the line here.
For Napa County and City, this has been a difficult issue. Both entities have cut pensions to new employees in the last year, which is politically difficult to do because it hurts employee morale to see their fellow employees get reduced benefits compared to other local governments. Napa was already average on pay and benefits, but our governments stepped out ahead and reduced benefits anyway, the right thing to do and they should be commended for that.
But the pensions need to be cut more in my view, because they are still too high. But this needs to happen on a state level so that the county or city doesn't feel like the ignored step child. Tackling this statewide is a key part of Brown's proposal, all state, all counties and cities on the same plan. This is a key and very positive part of Brown's proposal.
Here is a site you can read an outline of what he proposes.
They include having employees pay half of their pension costs; right now in Napa they pay about a quarter to a third of the cost, depending on the specific employee group. It also includes raising the retirement age to 67, a huge cost savings. More than I would have asked for.
Another key feature is putting most of the pension in a 401K type plan, making the employee take the risk of having their own investment, rather than a guaranteed benefit. This idea is very popular with those in the public who criticize the pensions as excessive, including the Napa County grand jury, but I don't think it is really a good idea.
The reason is that the amount the government has to match each year will be constantly subject to negotiation, and if the salaries are high enough and the contribution is high enough it won't really save money, nor will it end the constant battle.
My conclusion is that we need to just put a cap on the amount anyone can receive. That will end the negotiations in which the taxpayers invariably lose. The League of California Cities, a government group, put out a report in 2005 saying that what a person needs to maintain their current life style when they retire is 70% of their salary. They then went on to recommend a 100% pension for government employees, but hey, they are a government group.
Safety should be capped at 70%, everyone else at 50%. Those are still very generous retirements, but it will save a lot of money. That will mean that it will be worth it to keep working as long as you can and cut down on early retirements. A simple cap like that would solve most of the problems associated with the current system.
In any case, Brown's plan is outstanding and now that he is really coming through with some substantial cuts we have to give both him and his Republican detractors credit. Let's vote this into law.