A public employee pension solution . . . from California?

Laer Pearce Author, Crazifornia
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Unlike their brethren in Wisconsin, California’s teachers and their allies in other public employee unions haven’t been chanting and waving signs at the state capitol. After all, why should they? The very man who gave them collective bargaining rights in the first place is back in the governor’s office. The Democrats they funded and voted for have overwhelming majorities in the Senate and Assembly — and thanks to their funding of Proposition 25 last November, a mere simple majority will be needed to pass Jerry Brown’s budget, which doesn’t lay a finger on state employee pensions.

Why should the teachers care if their pension fund is “sliding down a steep slope towards insolvency?” in the words of the San Jose Mercury News (hardly a conservative mouthpiece). After all, it’s the taxpayers, not the teachers, who will have to pick up the tab for tens of thousands of comfy retirements from the classrooms when the fund can’t cover the costs. It is a matter of “when,” not “if,” because the teachers’ retirement fund portfolio’s value has plummeted by 25 percent, opening a $40.5 billion unfunded liability.

Why should they worry about coming elections, like the one last November in Wisconsin, which gave Scott Walker and his GOP buddies a mandate for real hope and change? Not a single Democrat seat was lost in Sacramento last time around and not a single Republican won a statewide office, despite the best efforts of Tea Party activists and pension watchdogs. The state remains unapologetically and defiantly blue — in fact, even though the state’s population has grown by 10 million since Ronald Reagan was president, there were more Republicans in the state to vote for him then than there are today.

Still, even in California, public employees have something to worry about and it’s called the Little Hoover Commission. Lucky for them there’s no Big Hoover Commission because the Little Hoover Commission is generating headaches enough for public employee union bosses. The commission, which basically serves as the state’s investigative panel on matters of efficiency and effectiveness, issued a report yesterday saying it is time for the state to establish the legal authority to freeze employee benefits for current workers and adopt “more sustainable pension plans” for these employees going forward. The commission also wants to see the salary level used to compute pensions capped somewhere around $80,000, with retirement ages stretched out several years, “benefit spiking” prohibited, more employee contributions required, a ban on retroactive pension increases, and a couple other suggestions that should make the bosses reach for the Bromo.

Within a couple hours of the news of the report being posted on the Sacramento Bee’s State Worker blog, more than 350 comments had been posted, most of the “it’s union-busting” and “they don’t care about us hard-working public servants” and “make the corporations and the rich pay their fair share first” ilk. The tone is rebellious, but it’s still not likely California will see sustained union protests. After all, the heartburn brought on by the report will probably fade quickly, since it’s obvious to everyone that previous Little Hoover Commission recommendations to improve the efficiency and effectiveness of state government have been largely ignored, as the state stays firmly stuck in a seemingly perpetual cycle of inefficiency and ineffectiveness. Given California’s current leadership, it’s safe to assume the commission wasn’t using its time too effectively or efficiently in suggesting hard but useful changes to the state’s pension plans.

Even if the union-elected governor were to take the commission’s recommendations seriously — and he’s given no indication from his actions thus far that he will — the state’s public employees still could rest easy. Any effort by the state to force the courts to shake up personnel contract law is doomed to failure, as Orange County has found out through its lawsuit challenging retroactive pension benefit increases. The case has bombed in two rounds thus far, most recently with the state’s Court of Appeals. In that court, one judge was heard urging her colleagues on the bench to proceed very cautiously because the matter before them concerned their own pensions as well as those of Orange County’s workers.

On the bright side, the slide of the nation’s largest state economy into public pension fiscal Armageddon probably won’t go on forever. Older state employees have fleeced the younger ones, forcing newbies into modest pension plans in order to try to turn public attention away from their own fat plans. So, in a few years a disgruntled young DA may just find a similarly angry young judge and start making some new law, just like the Little Hoover Commission recommended. And if the case takes long enough to get through the courts, a young California Supreme Court might just rule in favor of taxpayers for a change . . . by around 2030 or 2040, at best.

Or maybe, just maybe, California will defy all odds, vote in a Scott Walker for governor, and give him GOP majorities in both houses. Stranger things have happened in the state that brought us Charles Manson and Primal Scream Therapy.

Laer Pearce, a veteran of three decades of California public affairs, is currently working on a book that shows how everything wrong with America comes from California.