Administration June 3, 2006

Golden State Govt. Group Advances Pension Reform Alternatives

March 18, 2005 (PLANSPONSOR.com) - Final salary pension determinations for California public employees would be based on a three-year rather than a one-year average under a slate of reform proposals from a Golden State government group.

Reported by

Fred Schneyer

Also on the plan released Thursday by the California State Association of Counties was a proposal to limit lucrative public safety retirement formulas to employees who actually face physical danger as a police officer, firefighter or other public safety worker, according to a news report in the Contra Costa Times.

The association also called for an end to retroactive benefits enhancements that allow workers to retire with more generous pensions than previously planned. The proposal would also prevent public employers from spending excess pension fund earnings on new benefits.

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According to the newspaper, the group of county officials put out the alternative slate of pension system reforms in light of current efforts to replace the state’s pension plan with a 401(k) type plan for workers hired after mid-2007.

Steve Keil, the group’s legislative director, said that bloated pension costs from new benefits, longer life spans and stock market losses are swamping state and local governments and are making the system ripe for reform – but not by diverting workers into a defined contribution plan.

The DC alternative “is a one-size-fits-all approach,” Keil said, according to the newspaper. “Our pension plans are incredibly complicated and costly, and the solutions that work will not be simple remedies.”

Failing a negotiated compromise, Governor Arnold Schwarzenegger may include the proposal to move new workers to a DC plan in the broad reform package he plans to put before voters this year, the newspaper said.

The complex issue lends itself to thorough legislative examination, not a ballot initiative, said Contra Costa County Administrator John Sweeten, chairman of the association’s reform committee. “There are critical shortcomings to our existing system that need to be addressed,” Sweeten said, according to the newspaper. “That’s why it’s so important that all of the interested parties get together and start talking right away.”

More information about the California State Association of Counties is at http://www.csac.counties.org/ .