Public employee unions push back with lawsuits over pension reforms

California unions, accustomed to getting their way in the Capitol, lost some ground last year when Gov. Jerry Brown pushed through the Legislature a series of public-pension cuts that affect their members. Now several labor groups have gone to court in an attempt to reverse some of the cuts, forcing Brown to defend legislation he used to persuade voters that he was being frugal with their tax money.

“Nobody expected [unions] to take this lying down,” said Dan Pellissier, president of the advocacy group California Pension Reform.

Read the complete story by reporter Chris Megerian in the Los Angeles Times.

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CalPERS Nets 0.14% Return on Investments for FYE 2011-2012

By Morgan Cook | Orange County Register – The giant investment fund that feeds the state’s public employee retirement system contributed far less than expected to the pension kitty last year, fueling a long-standing debate over how much the system can — or should — rely on investments to cover retirement costs in the long haul.

The California Public Employees’ Retirement System, or CalPERS, expects a 7.5 percent annualized rate of return on its more than $200 billion in investments. The expectation was revised downward last year from 7.75 percent, which was CalPERS’ expectation for more than a decade.

But in the fiscal year ending June 30, 2012, the system got just a 0.14-percent net return on its billions in investments, according to CalPERS’ Comprehensive Annual Financial Report for the 2011-12 fiscal year. Read the entire news story . . .

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Fate of ballot measures often depends on the wording

Kamala HarrisBy Josh Goodman | Stateline.org — Just a couple of months ago, Dan Pellissier was leading an effort to ask California voters to overhaul the state’s public retirement system. The ballot initiative campaign looked like it had momentum, with polls showing a majority of Californians in support of pension changes. The stage appeared set for a November showdown between fiscal conservatives and public employee unions.

Then, says Pellissier, just as the campaign was gearing up to begin collecting signatures to gain a spot on the ballot, it came to a screeching halt in the office of California Attorney General Kamala Harris.  Read the entire article . . .

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San Jose’s pension reform ballot measure featured on CBS Evening News

CBS News | The economy is slowly improving, but many cities in California and across the nation are struggling under a mountain of debt, much of it in pension obligations to public employees like policemen and firemen. The city council in San Jose voted yesterday to put a measure on the ballot that would slash the pensions of its union workers in June. CBS News correspondent Ben Tracy explores the issue:

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Attorney General distorts democracy to aid unions

By Steven Greenhut | Orange County Register — We expect all sides in politics to fight hard, given the stakes involved, but our system rests on the broad acceptance of a set of fairly applied rules. We know, for instance, that no matter how nasty the coming presidential election becomes, the loser ultimately will cede power after the final count is in. This isn’t a kleptocracy, where the only redress for the losing side is to take to the streets in a violent revolt.

Unfortunately, California Attorney General Kamala Harris’ recent misuse of power to provide a dishonest ballot title and summary for proposed pension-reform initiatives, which she opposes, comes right out of the totalitarian playbook, where those wielding power recognize no rules of decency or fairness.  Read the entire column . . .

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California Pension Reform suspends campaign

The following is a statement from Dan Pellissier, president of California Pension Reform:

Dan Pellissier“California Pension Reform is suspending its effort to qualify an initiative for the 2012 ballot after determining that the Attorney General’s false and misleading title and summary makes it nearly impossible to pass. We will continue to push our elected representatives to reform our broken pension system and if they fail we will focus on qualifying an initiative for 2014. California taxpayers face more than $240 billion in pension debts that grow every year, a brutal math problem that requires courageous leadership instead of the special interest politics that is blocking meaningful reform today.”

BACKGROUND:

“..the title and summary of two pension-reform measures aimed at the November ballot could not have been cast more darkly – and, on some key points, deceptively – if they were written by the public-employee unions that oppose them.” (John Diaz, “Attorney General’s Role in the Initiative Process,” San Francisco Chronicle, January 29, 2012)

“The attorney general’s summary fairly well reflected the opponents’ anticipated arguments against pension reform. It did not represent any reasonable interpretation of impartiality. In fact, unlike the office’s title and boosterish summary of the governor’s tax measure, its selective and shaded characterization of pension-reform provisions did not attempt to accentuate any of the public benefits of reining in pension costs. It was, in a word, unfair.” (John Diaz, “Attorney General’s Role in the Initiative Process,” San Francisco Chronicle, January 29, 2012)

“The latest examples, under Democratic Attorney General Kamala Harris, are the very positive description of the Brown-sponsored tax-increase measure that unions support and the negative, and even misleading, way two proposed public pension initiatives that unions despise are described.” (Dan Walters, “California Politicians Use Power to Fix the Ballot Game,” Sacramento Bee, January 30, 2012)

“…the chosen words clearly make Brown’s measure more palatable to voters and the pension-reform measures more onerous.” (Dan Walters, “California Politicians Use Power to Fix the Ballot Game,” Sacramento Bee, January 30, 2012)

“Harris, like attorneys general before her, appears to have put her thumb on the scale, and issued titles and summaries that serve the political purposes of her political allies.” (Joe Mathews, “Who Should Write Ballot Measure Titles? The Voters,” Prop Zero, February 2, 2012)

“The fact that attorneys general follow their political bearings should not be a surprise to anyone. Not only is the attorney general’s office partisan, but also that particular office is seen as a jumping off point for higher office in the political food chain.” (Joel Fox, “Ballot Measure Titles and Summaries Should Not Be Written by Attorneys General,” Fox & Hounds, January 31, 2012)

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Clamor grows to rein in California’s public pension benefits

By Patrick McGreevy | Los Angeles Times — Gov. Jerry Brown came to office promising to reduce the state’s burgeoning pension costs … Saying the system is not financially sustainable, the governor has laid out a 12-point plan to change it. He would raise the retirement age, require many employees to contribute more toward their benefits and stop allowing workers to buy retirement credit for years they don’t work, among other changes. … But key parts of the plan would apply only to people hired in the future — after the overhaul passed the Legislature and became law. … “The governor’s plan doesn’t go far enough,” said Dan Pellissier, president of California Pension Reform, a group led by former state officials that is proposing a ballot measure to rein in pensions further.
Read the entire news story . . .

California Gov. Jerry Brown

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A $2.5 billion pension tsunami in San Mateo County

By Chuck McDougald | Daily Journal — Gov. Jerry Brown is proposing deep cuts in health and welfare programs and warning of cuts to schools, universities and courts if voters refuse to pass tax hikes in November. Taxpayers might find that odd, given that this year’s projected tax revenue is flat or even slightly higher than last year.

Same or higher tax revenue, but draconian cuts in the budget. What are we missing?

Missing from Brown’s cuts versus taxes propaganda are pensions for state workers. A pension tsunami is rolling over California taxpayers, destroying all budgets in its path. Years of out of control pension grabs by politicians, unions and complicit managers have left California taxpayers on the hook for close to half a trillion dollars in unfunded state pension liabilities, according to a recent Stanford University study.

State, county and city budgets are also drowning in pension red ink. San Mateo County is one of the worst offenders. According to a study by Northwestern University’s Kellogg School of Management, our county’s taxpayers owe close to $2.5 billion in unfunded pension liabilities for current and future retirees. Read the entire op-ed . . .

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Legislative committee holds hearing on pension reform in Sacramento

Under increasing public and budget pressure to change retirement benefits for state and local government workers, the Legislature is finally holding hearings on a hybrid plan, which combines a 401(k)-type plan with public pensions. Nannette Miranda reports on KABC-TV:

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CalSTRS reports 2.3% earnings in 2011

By Dale Kasler | The Sacramento Bee — CalSTRS said today it earned 2.3 percent on its investments in 2011, “a year of extreme market volatility.”  The announcement came a day after CalPERS reported its 2011 results, a gain of 1.1 percent.  Read the entire news story . . .

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California’s public employee unions are in denial on pension costs

By Dan Walters | The Sacramento Bee — Whenever someone suggests that California’s public employee pension systems need reform, civil service unions react dismissively, often with attacks on the credentials or even the morals of critics. … The irony is that the hundreds of thousands of teachers, firefighters, police officers, clerks, janitors, garbage collectors and other public employees whose futures depend on the systems have the most to lose if they are not reformed.  Read the entire column . . .

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CalPERS earns 1.1% on investments in 2011

CalPERSBy Marc Lifsher | Los Angeles Times — The nation’s largest public pension fund, the California Public Employees’ Retirement System, posted a 1.1% return on its investment portfolio in 2011, Chief Investment Officer Joseph Dear told his board.

The 2011 performance was well below the estimated average annual return of 7.75% that the fund’s actuaries say is needed to meet current and future obligations to its members.  Read the entire news story . . .

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California Pension Reform applauds Gov. Brown’s challenge to the Legislature

SACRAMENTO — Dan Pellissier, president of California Pension Reform (CPR), today responded to Governor Jerry Brown’s challenge to the Legislature to take action on pension reform:

“We applaud Governor Brown for continuing to challenge the Legislature to act on pension reform. As the Governor has said, the current system is a ‘Ponzi scheme’ and ‘the arithmetic doesn’t add up.’ Unfortunately, no one is holding their breath for the Legislature to do anything meaningful on pensions, particularly in light of Democrats and union bosses already rejecting the Governor’s proposal out of hand. That’s exactly why our pension reform initiative is so critical. In the absence of Legislative leadership we will give Californians the opportunity to fix our broken pension system once and for all.”

In his State of the State speech today, the Governor addressed the state’s pension crisis:

“As for pensions, I have put forth my 12 point proposal. Examine it. Improve it. But please take up the issue and do something real. I am committed to pension reform because I believe there is a real problem. Three times as many people are retiring as are entering the workforce. That arithmetic doesn’t add up. In addition, benefits, contributions and the age of retirement all have to balance. I don’t believe they do today. So we have to take action. And we should do it this year.”

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Legislative Analyst’s Office fails to give California Pension Reform’s proposals a fair reading

Mike GenestBy Mike Genest | The Sacramento Bee — During my four years as director of the state Department of Finance I signed off on the Legislative Analyst’s Office analyses of hundreds of initiative proposals – and I almost always agreed with their conclusions. I have the highest regard for the LAO, where my career in state government began. So, I was surprised and disappointed with its analysis of the two pension reform measures filed by California Pension Reform.

The LAO says, essentially, that both measures will create both costs and savings. While the potential to create billions of dollars of savings for taxpayers in California is obvious – and acknowledged by the LAO – it may be less obvious how such aggressive pension reform plans could create additional costs. The LAO suggests that costs would arise for two reasons, both of which are theoretically correct but, in my opinion, misleading.  Read the entire op-ed . . .

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A resolution for 2012: Fixing California’s public pension problems

Dan PellissierBy Dan Pellissier | Capitol Weekly — As many Californians fill up gyms, bike trails and jogging paths to act on their New Year’s resolutions to improve their personal health and fitness, this year California voters will fill voting booths to kick the $240 billion pension debt habit that is overwhelming our budgets and damaging our fiscal health.

Over the years, CalPERS and other pension fund administrators have worked hard to minimize the impact of the stock market losses that make it much more difficult to service this huge pension debt, yet repayment periods can only be extended so far and rosy market return assumptions are looking more ludicrous each quarter.

CalPERS and other government pension plans assume they will earn at least 7.75 percent return on their investments, while the world’s most successful investor, Warren Buffet, assumes his pension funds will earn just 6.2 percent over the next decades. If Buffet is right, California’s true pension debts approach $500 billion. In 2009, former CalPERS head actuary Ron Seeling called the state’s pension systems “unsustainable” and said we have to “find some other solutions.”  Read the entire article . . .

Dan Pellissier is president of California Pension Reform.

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Can California voters recoup excessive pay, benefits and pensions from current public employees?

By John Eastman | Fox & Hounds — California is broke.  Every year we spend about $20 billion more than we take in, despite a constitutional requirement of balanced budgets.  Our elected officials have tried every trick in the books to make it appear that they have not been acting unconstitutionally.  They’ve “borrowed” from local governments and schools with phony promises to repay next year, much as Wimpy used to promise Popeye that he’d pay on Tuesday for a hamburger today.  Total outstanding tab on these gimmicks – about $40 billion and counting.  They’ve bond-funded current operating expenses as well as everything else they can think of, from school buildings to stem cell research.  Current tab – more than $77 billion, the second-highest per capita general obligation debt load in the country.

But by far the largest part of our bankruptcy-inducing debt is unfunded pension and health care benefits promised to public employees, extracted over the years from public employee union bosses who practically own the legislature in Sacramento.  Even in the best scenario of investment returns that match the average rate over the past century, the unfunded liability is a quarter of a trillion dollars.  Read the entire article . . .

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California Pension Reform responds to Attorney General’s title and summary of initiatives

SACRAMENTO – Dan Pellissier, President of California Pension Reform (CPR), today responded to the Attorney General’s title and summary of CPR’s initiative proposals.

“Californians know our public pension system is broken and voters overwhelmingly support pension reform.   Our measures are a responsible way to rein in out-of-control government pensions that are robbing services like public safety and higher education. We are confident that voters will see through the Attorney General’s biased and misleading ballot statement. A vast majority of Californians, including union members and the Governor, support pension reform and we look forward to providing voters an opportunity to fix our broken pension system.”

While the Attorney General accurately describes parts of the initiatives, she provides other statements that are either provably false or grossly misleading:

1. “Reduces pension benefits for current and future public employees…”

This is an absolutely false statement. The proposals do not change pension benefits for current employees. The proposals simply require current employees to pay more for future benefits and then only if the fund is at risk of not being able to pay the employees the benefits they are due.

2. “… including teachers, nurses, and peace officers, but excluding judges.”

The AG selectively lists three positive poll-tested jobs out of thousands of government employee job classifications when both measures apply to all public employees, except constitutionally-protected judges.

3. “Prohibits public retirement systems from providing death or disability benefits to future employees.”

The AG includes the words “prohibits” and “death or disability benefits” in the same sentence when our measures actually specifically provide for those benefits. To avoid any confusion about death and disability benefits, both initiatives say:

“Sec 12 (d) All government agencies that provide pension or other retirement benefits for their government employees may also separately provide death and disability benefits for the benefit of their government employees, regardless of the date of hire.  The cost of such death and disability benefits is not subject to the cost limitations established in this section.”

4. “Over the next two or three decades, either increased annual costs or annual savings in state and local government personnel costs, depending on how this measure is interpreted and administered.”

The AG repeats the LAO’s misleading analysis that would require the state to maintain a system that Governor Brown rightly calls a “Ponzi scheme.” The LAO acknowledges that the proposals do not necessarily increase costs and fails to recognize that these proposals would immediately begin to pay down the state’s hundreds of billions of dollars in pension debt. The mounting debt would be paid off by shifting more of the costs to the employees, not the state.

The title and summary for each of the two initiatives can be found on the Attorney General’s website here and here.

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Public Pension Puffery: 12 half-truths that deserve to be debunked in 2012

Girard MillerBy Girard Miller | Governing Magazine — One of my pet peeves in the ongoing debates over public pension reform is the way partisans on each side try to pitch half-truths and myths to support their arguments. The other side seldom believes any of these, but they help rally the allies on the speaker’s side. Sometimes the press naively re-circulates these fallacies, which leaves the general public even more confused about what to believe. There’s an old saying in politics that if you tell the same lie long enough, the public will eventually believe it — and that apparently is the mentality of lobbyists on both sides. In an effort to start the new year with a clean slate for public debate, I’d like to set the record straight on a dozen of the most glaring fallacies and silly slogans.

This is a lengthy column, so readers can click on to any one of these topics to jump to that subject:

1. “The pension mess was caused by greedy people (from the other side), not us.”

2. “There’s no crisis. The stock market will recover and then there is no problem.”

3. “The solution is to replace pensions with 401(k) plans, like the private sector.”

4. “Experts consider 80 percent to be a healthy pension funding ratio.”

5. “Only 15 percent of pension costs is paid by employers. Investment income pays the lion’s share.”

6. “My pension contract is protected by the Constitution and can’t be violated.”

7. “States are already fixing the problem with reasonable pension reforms.”

8. “The solution is collective bargaining. There is no need for drastic legislation.”

9. “This is a $3 trillion problem when you measure it using honest (risk-free) math.”

10. “We earned more than 8 percent in the last 25 years, and will do so again.”

11. “The average public pension is $23,000.”

12. The $100,000 pension club.

So let’s look at each of these myths, misrepresentations and slogans, one-by-one. Read the entire article . . .

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State finance officials should face the truth on pension promises

David CraneBy David G. Crane | The Sacramento Bee — In the 17th century the Catholic Church attacked Galileo for advocating Copernicus’ view of the universe. Three centuries later, Pope John Paul II apologized for that persecution.

Hopefully it won’t take California’s finance officials that long to accept some basic financial truths, but based on the venomous reaction of some of those officials to a recent academic study by my Stanford colleague Joe Nation, one can’t be sure.

Nation reached three conclusions:

• The state’s pension debt is greater than the state reports.

• The state is counting on unlikely investment returns to meet that debt.

• Because those returns are unlikely, state pension costs are likely to soar.

Read the entire op-ed . . .

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Berkeley’s city manager is not unique retiring with a bigger pension than his final salary

By Daniel Borenstein | Contra Costa Times — In November, Berkeley City Manager Phil Kamlarz traded his $250,000-a-year job for retirement with a starting pension of about $266,000 annually. The deal highlights the city’s generous pension program, which is one of the better plans in the state but by no means unique. The costly program is also $420 million underfunded, a shortfall equal to more than three years of city payroll, according to the city’s latest actuarial reports.  Read the entire article . . .

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