Backers of an effort to slash the retirement of public servants got a stiff dose of reality this month when leaders of the state’s top public investment funds raised red flags about the plan that could be headed for the 2016 ballot.
They said the latest proposal on public pensions from former San Diego Councilman Carl DeMaio and former San Jose Mayor Chuck Reed would undermine decades of labor law and collective bargaining precedent and threaten retirement security for tens of thousands of working families.
It would make it nearly impossible for the funds to provide defined benefit pensions to public workers and would jeopardize the solvency of the systems themselves.
CalPERS CEO Anne Stausboll said the measure was riddled with vague language, making it likely to wind up tangled in the courts for years and creating confusion for local governments and for families. She said it could be interpreted as violating pension promises to current employees, might threaten CalPERS’ federal tax-exempt status and will create chaos by forcing employers to close their defined benefit programs to employees hired after 2018.
Stuasboll also said the proposal would “almost certainly make providing death or disability benefits extremely impracticable.”
The comments echoed those of CalSTRS CEO Jack Ehnes, who noted that “this measure would …impose additional risks on the plan’s ability to achieve full funding.”
Since CalSTRS’ cash flow would become increasingly negative, taxpayer contributions would need to increase to cover lower expected returns. And the impact of the measure would fall most heavily on women, who make up nearly 70 percent of its members. Many of them interrupt their careers to raise families. They likely would be deprived of their portable membership rights, since they will be treated as new employees unless voters approve an exception.
The state’s nonpartisan legislative analyst said the risky scheme would create “significant uncertainty” for the state’s top two pension systems. As the state Attorney General’s office wrote in its official description of the ballot measure, the proposal would eliminate retirement and health benefits for thousands of working families and repeal constitutional rights to promised benefits for current employees.
As mayor, Chuck Reed convinced San Jose voters to go along with a similar pension measure to cut benefits for existing employees. After an expensive legal battle and a mass exodus of the police force, the city pulled the plug on it and hammered out a new contract with its public safety workers, with each side offering concessions. That’s how collective bargaining works.
But Reed is still trying to attract donors to his cause, enlisting Tea Party favorite DeMaio to help. Like Wile E. Coyote in the old Roadrunner cartoons, Reed believes this time he has devised a scheme to achieve his goal, even though experts see it as destined to fail.
Even many of Reed’s political allies understand that placing anti-worker measures on the ballot just galvanizes union turnout. Republican leaders have not embraced the measure for that reason; they know in a presidential year, the California electorate skews more Democratic than in off-year elections.
Polls echo what the legal analysis says — this initiative is a dead-bang loser on the ballot. That’s why Reed and DeMaio have failed to rally financial support.
Our state faces real challenges, prompted by demographic and economic changes that continue to leave too many people behind, even amid California’s financial recovery. Hopefully, the death of this politically-driven measure can help us finally begin talking about how to address those challenges and to ensure retirement security for all.
Dave Low is chairman of Californians for Retirement Security. He wrote this for this newspaper.
