Governor’s Proposal Would Solve Less
Than 5% of the State’s Pension Debt
Duf Sundheim of California Pension Reform today offered the following prepared testimony at the Conference Committee on Public Employee Pensions in Sacramento:
“Thank you for the opportunity to testify. My name is Duf Sundheim. I represent California Pension Reform, the citizens group founded by the late Assemblyman Keith Richman that has drafted a pension reform initiative for the November 2012 ballot.
“Pension reform is not an ideological issue, it is a math issue. As the Governor, your own legislative analyst and your own reform commission have pointed out, our unfunded pension obligations are having a crushing effect on public safety, education and other vital services. For example, during the last 4 years San Jose’s retiree benefit expenditures have more than doubled, forcing the city to eliminate 23 percent of its workers. The same is happening all over this state – and it is only going to get worse. Much worse.
“While we commend the Governor for raising the issue, his plan does not come close to solving the $240 billion problem. Although the Governor says his plan at most would save $11 billion over 30 years, that addresses just 5% of the problem!
“Our proposal would save much more, much faster by:
- Ending abuses such as salary spiking and retroactive benefit increases
- Reducing unfunded liabilities
- Making benefits for new workers comparable to benefits in the private sector
“And it accomplishes these goals in a manner approved by the courts and without requiring a reduction of benefits to current employees.
“Let me repeat. Our initiative does not change the benefits being earned by current employees. Our measure simply charges current employees more for the same benefits when their pension funds are less than 80% funded.
“We literally can no longer afford to hide in the corner, put our hands over our ears and hope that unrealistic investment returns will make the problem go away. That is what they did in Greece and we can see how well that worked.
“We’ve seen in recent months that Democratic-controlled legislatures in states with influential unions have significantly reformed their pension systems. If New York, Rhode Island and New Jersey can do it, so can California.
“One hundred years ago California faced serious problems. The legislature failed to act and in 1911 the voice of the people was born through the creation of the initiative.
“It is now 2011. California faces a critical pension crisis. Hopefully you will act. If not, the voice of the people again will be heard.”