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California Legislature OKs pension changes

August 31, 2012 12:00:00 AM PDT
Pension reform for the state's public employees is about to become a reality after final passage Friday.

The California Legislature approved Governor Jerry Brown's package of pension reforms Friday. The main pension bill, AB340, passed 49-8 in the Assembly and 38-1 in the state Senate.

The bill was approved on the final day of the legislative session.

Some Republican lawmakers complained the process was rushed and preferred to delay a vote until the drafting mistakes were fixed. But several GOP lawmakers voted for it while saying the Legislature also needs to do much more to address an unfunded public pension liability of nearly $165 million.

The legislation will increase the retirement age for new employees, cap the annual payout $132,000, eliminate numerous abuses of the system and require workers who are not contributing half of their retirement costs to pay more.

Brown said he supports the legislation even though it falls short of the 12-point reform proposal he offered last October.

Lawmakers voted even as companion legislation was hustled up to make key fixes in the hastily written bill, which was taken up on the final day of the legislative session.

Some Republican lawmakers complained the process was rushed and preferred to delay a vote until the drafting mistakes were fixed. But several GOP lawmakers voted for it while saying the Legislature also needs to do much more to address an unfunded public pension liability of nearly $165 billion.

Brown announced the pension package this week, 10 months after he released a more comprehensive reform proposal that would have gone much further than the approach approved Friday.

Underlying the negotiations was staunch opposition from public employee labor unions who are supporting Brown's November ballot proposal to temporarily raise sales taxes and taxes on high-income earners.

While some union leaders expressed dismay over the final bill, Democrats appeased their labor allies by removing some of the most important elements of Brown's original proposal, such as instituting a hybrid pension plan that would have included a 401(k)-style savings vehicle.

The package fell short of Brown's original proposal. In addition to the lack of a 401(k)-style plan that would make public employees bear some of the investment risk, as private-sector workers do, nothing was done to reduce skyrocketing retiree health care costs.

And the union-dominated board that oversees operations of the California Public Employees' Retirement System, the nation's largest public pension fund, will not face reforms or independent oversight of its decisions, as Brown had sought.

The Associated Press contributed to this report.


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