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Pension reform debate heats up in Sacramento

June 29, 2012 12:00:00 AM PDT
Are pensions for state employees threatening to bankrupt the budget? The debate over pension reform was under way Friday in Sacramento with some lawmakers calling for urgent action. Critics are calling for changes in pensions for state workers, claiming they are threatening to drain the budget. Not everyone agrees with that assessment.

When you combine state and local governments, the Pew Center on the States estimates California's public pension systems' obligations had $112 billion in unfunded liabilities in 2010. Add in retiree health costs, the total jumps to nearly $200 billion.

Pension reformers have been sounding the alarm for years that retirement costs will drain, maybe even bankrupt budgets. They say state leaders have made only modest changes because public employee unions are too powerful.

What employee contributions or investment gains can't pay for, taxpayers make up the shortfall.

"The hole in the budgets that are being caused by feeding this pension beast are eating up all the other money we need for the programs that we value, like schools and transportation and housing and safety net programs," said Dan Pellissier, president of California Pension Reform.

Pension supporters, though, point out the Pew Center's numbers are two years old, and that the stock market has done better since then. A pension fund is considered healthy if unfunded liabilities are kept to 20 percent or less.

"There's actually good news in the report in stating that California has gone from a funding ratio of somewhere around 60, 62 percent to 70, 78 percent for most of their pension funds," said Terry Brennand, a Service Employees International Union spokesman. "We're going in the right direction."

Republicans tried to bring Governor Brown's pension reform package to a floor vote this week.

There's an urgency because some elements need to be approved by the end of the month in order to be placed on the November ballot, but the Democratic majority sets the timetable.

"Where was the vote today? You had an opportunity to bring it up, debate it, to do up or down. What'd you say? No," said state Senate Minority Leader Bob Huff (R-Diamond Bar).

"Come on. You want to be part of the comprehensive solution here in California and in this Legislature? Then participate in all parts of governance, not just the parts that you find to be the most politically appealing or attractive," said state Senate President Darrell Steinberg (D-Sacramento).

Democratic leaders vow pension reform will be enacted this year. The question is how much will the final package resemble Governor Brown's tough proposals?


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