CFFR’s vice president Jack Dean appeared Sunday on the weekly public affairs show News Conference hosted by veteran KNBC reporter Conan Nolan. The show airs on Channel 4 in the Los Angeles market immediately following NBC’s Meet the Press. Appearing on the segment prior to Dean was former California governor Gray Davis, who signed the pension-boosting SB400 into law in 1999.
Governor Arnold Schwarzenegger’s weekly radio address was hosted this week by his Special Advisor for Jobs and Economic Growth, David Crane:
TRANSCRIPT OF COMMENTS BY DAVID CRANE:
Hello, this is David Crane, special advisor to Governor Schwarzenegger for jobs and economic growth, filling in for the Governor with another California Report.
When Governor Schwarzenegger came into office seven years ago, he immediately zeroed-in on the single biggest threat to your government’s fiscal health, its unsustainable pension system.
Over the last 10 years, pension costs for state workers have gone up more than 2,000 percent, crowding out spending on colleges, parks, health, the environment and other progressive programs.
More cuts are in store for those programs because pension costs are scheduled to more than double to $10 billion per year, and that’s the optimistic case because if the stock market itself doesn’t double every ten years, those costs will be even higher.
Worse, pension debt has been hidden from you through evasive accounting by our pension funds that would make even Wall Street blush.
A recent Stanford study shows that California’s pension debt is really half-a-trillion dollars, almost five times the amount officially reported.
That debt was never disclosed to you, much less approved by you, but you are paying for it now and your children will pay even more.
Let me give you just one example. This year, our state will spend more on retirement benefits than it will spend on the 33 campuses and 670,000 students that make up the UC and CSU systems, perversely causing student fees to rise 200 percent at the same time that class offerings are being cut.
This path, set in place in 1999 by a previous administration and the legislature at that time and sustained by misleading pension fund accounting, is simply wrong.
That is why Governor Schwarzenegger has fought tirelessly to address the pension problem.
He knows that failure to fix our pension system means an end to progressive programs or higher taxes, or both.
This week, our state took an important step toward reform.
The Governor reached tentative contract agreements with four state employee unions that include rolling back those 1999 pension increases and requiring increased employee contributions towards their pensions.
Many people said something like this could never happen.
So the Governor’s action is precedent setting, and could trigger similar action by California’s other public employee unions and in states across our nation.
It’s great news, but it’s only a first step.
That’s because California needs comprehensive pension reform, and that includes changes that must be adopted immediately by the legislature, including:
· Rolling back that 1999 expansion of pension benefits
· A permanent increase in employee pension contributions
· An end to the practice of pension spiking and
· Truthful accounting that discloses to you the costs, risks and debts arising from our pension systems.
This week it became clear, the time for pension reform is now.
Every day pension reform is delayed is a day that increases debt and means even greater cuts to progressive programs.
The four unions that agreed to change this week understand the wisdom in reaching a compromise, for the good of the people.
Our lawmakers need to be reminded of the same message, and also of the simple message that one cannot be progressive and at the same time be opposed to pension reform.
Thank you for watching, and thank you for listening.
You can find the press release and a downloadable MP3 audio file here.
You know that an issue has developed widespread awareness when it’s the subject of a skit on Saturday Night Live. In case you missed this past weekend’s show, here’s the skit:
Comment made by California gubernatorial candidate Meg Whitman at a recent Orange County Register editorial board interview: “The era of a defined benefit program is over.”
MoneyWatch’s editor-in-chief Eric Schurenberg predicts that public employees will soon be going through their own version of a cold reality bath as anger mounts over tax increases to pay for government pensions, and that ”they can’t count on pension promises that states can’t afford to keep.”
Barron’s cover story this week by Jonathan R. Laing titled “The $2 Trillion Hole” is an excellent overview of the nation’s escalating public pension disaster. “Promised pensions benefits for public-sector employees represent a massive overhang that threatens the financial future of many cities and states,” states the teaser paragraph. You can read the article here.
On Sunday, The Washington Times ran a review of Steven Greenhut’s book, Plunder!
Says reviewer Jeremy Lott, “Mr. Greenhut does a good job of showing how California’s public employee unions have done so much to cause the state’s budget troubles by negotiating large salaries, benefits and retirement packages far out of line with state revenues.” You can read the entire review here, and you can order the book here.
Reason Foundation’s vice president of research Adrian Moore appeared on Stuart Varney’s show on Fox Business Network on March 3. The topic of discussion was the high pensions received by California’s prison guards and their impact on the state’s financial problems:
In this short video clip from Fox Business Network’s Varney & Company, John Stossel discusses with host Stuart Varney how high-paying government jobs and pension costs are hurting state governments across the country. Says Varney, “The extraordinary pension payments to retired government workers is the single biggest issue in the insolvency of California.”
The Contra Costa County Retirement Board took up the issue of pension ’spiking’ at its meeting Monday. CFFR’s president Marcia Fritz participated and was interviewed in this report by Laura Anthony of San Francisco’s KGO-TV. Read the accompanying news story here.
The Orange County Taxpayers Association has sent the following letter to the Board of Supervisors saying that “structural reform of future benefits is essential” in bargaining with the Association of Orange County Deputy Sheriffs:
OCTAX
Orange County Taxpayers Association �
30205 Hillside Terrace
San Juan Capistrano CA 92675-1542
January 10, 2010
The Honorable Pat Bates, Chair, Orange County Board of Supervisors 333 West Santa Ana Boulevard Santa Ana CA 92701
Dear Chairwoman Bates,
The Orange County Taxpayers Association (OCTax) understands that your Honorable Board of Supervisors is bargaining with the Association of Orange County Deputy Sheriffs (AOCDS).
The time is propitious. When public employee advocates such as former Speaker Willie Brown, the Public Employees’ Retirement Journal and CalPERS’ chief actuary all acknowledge that existing retirement and health benefits are “unsustainable,” even the most fervent unionists probably would agree (if only behind the closed doors of the bargaining room).
OCTax can’t hear the discussion in your meetings with AOCDS. We hope it isn’t quibbling over “a little more of this, a little less of that.” Structural reform of future benefits is essential.
Since – oh, about 1889 – previous Boards of Supervisors lacked the gumption to tackle this issue.
Your Board has a good record so far. In 2006, you reduced the costs of two other unions’ retiree health care by about $900 million. In 2008, voters approved your Measure J, which gives the public the power to approve future pension increases. (OCTax co-signed the ballot argument with then-Chairman Moorlach.) In 2009, you gave employees a choice between the traditional defined-benefit pension and a new defined-contribution plan; it is unclear how much money this will save, but simply introducing the defined-contribution concept was a dramatic step forward.
Please continue this course of structural reform. Act decisively and judiciously now. Otherwise, a future Board will be forced to act decisively, but will be unable to act judiciously because the County budget will have been eviscerated. Carpe diem quam minimum credula postero. At a bare minimum, you and AOCDS must negotiate a new tier of less lavish benefits for future employees, and existing employees should contribute substantially toward their existing benefits.
OCTax harbors no malice toward AOCDS or other public employees. On the contrary, we say often and publicly that they are equal to employees in the private sector and deserve equal pay and benefits. We want them on the job. But if the County goes broke, their jobs will disappear.
Sincerely,
Reed L. Royalty, President
cc: Vice Chair Nguyen; Supervisors Moorlach, Campbell, and Norby
In his column today in the Los Angeles Times (“Arnold Schwarzenegger hits the right note”), veteran Sacramento-watcher George Skelton gets Willie Brown to explain what caused him to come to the conclusion that public employee pensions have become a problem:
The second intriguing Schwarzenegger move is his stab, one final time, at scaling back state employee pensions. The governor said that state pension costs have risen 2,000% in the last decade while revenue has increased only 24%.
“We are about to get run over by a locomotive,” he said. “We can see the light coming at us.”
Last June, Schwarzenegger proposed that future pensions of new hires be scaled back to what they were before Gov. Gray Davis and the Democratic Legislature generously enhanced benefits in 1999. The governor still embraces that modest plan, which seems reasonable.
The prospective pensions of current employees would remain intact. “These pensions cannot be changed — either legally or morally,” the governor said Wednesday. “It is a done deal.”
If Democrats won’t listen to Schwarzenegger, they should at least pay attention to their icon: legendary Assembly Speaker Willie Brown.
In his weekly column in the San Francisco Chronicle on Sunday, Brown wrote about the “out of control civil service.”
“The deal used to be that civil servants were paid less than private sector workers in exchange for an understanding that they had job security for life,” Brown asserted. “But we politicians — pushed by our friends in labor — gradually expanded pay and benefits . . . while keeping the job protections and layering on incredibly generous retirement packages. . . . This is politically unpopular and potentially even career suicide . . . but at some point, someone is going to have to get honest about the fact.”
Brown attended Schwarzenegger’s speech, sat in the Assembly balcony and was introduced by the governor. I asked him when he had concluded that public employee unions were out of control. After he became mayor of San Francisco, Brown said.
CFFR’s president Marcia Fritz was interviewed after Governor Schwarzenegger’s “State of the State” address yesterday by reporter Rick Boone of KTXL-TV (Channel 40) in Sacramento. Here’s the report:
