Does your public agency contract with, or a member of, CalPERS, STRS, or a ’37 Act system? Have you exhausted all possible ways under those systems to reduce pension costs such as reducing benefits for new hires, eliminating or reducing employer paid member contributions, or reducing special compensation? Do you want to achieve more cost saving measures now and in the long run, but not sure how? Then, call your State Legislators because comprehensive pension reform for most cities, counties, and special districts can only be achieved at the State level.
There may be voices out there that want to place measures on local election ballots to institute substantial changes in public employment retirement benefits, such as those done by the Cities of San Diego and San Jose. As we mentioned in our previous blog, this will not help PERS, STRS, and ’37 Act agencies.
- They can change state law or they can help place a measure on the ballot for California voters to elect certain reforms. Only changes in state law can provide you with more cost saving options than those that currently exist.
- It saves the time, money and energy in passing ineffectual local ballot measures.
- A local agency will not be sued for a change in state law made by the Legislature (or California voters as a whole). The State may still face obstacles, but your local agency is not necessarily footing the bill.
- If you aren’t talking to your Legislator about what your agency needs, then who is?
The question becomes whether the Legislature will answer the call. The Legislature has had little to nearly no movement on a plethora of Assembly and Senate pension reform bills this year. The Legislature was back in session on August 7th, but the session ends in just over two weeks until the new year.
California Senator Mimi Walters, who serves as Vice-Chair of the Senate Committee on Public Employment and Retirement, was kind enough to lend us her time to comment. Senator Walters, who previously served as a council member and mayor for the City of Laguna Niguel, stated the majority party in the Senate is “not serious” about comprehensive pension reform at this time. Although, the Senate President Pro-Tem has indicated that some pension reform measures will pass before the Senate breaks at the end of August, it is unlikely much of Governor Brown’s 12-point pension plan will come to fruition any time soon, if at all. The Chair of the Senate Committee on Public Employment and Retirement has also been slow or unwilling to grant hearings on a number of key bills, delaying progress. Senator Walters indicated that the Legislature may make “minor tweaks” such as passing measures to prevent pension spiking, purchase of air time, and double-dipping (working for a public employer while receiving a pension allowance). However, while Senator Walters stated she is working to achieve immediate comprehensive pension reform, it is unlikely the Legislature as a whole will accomplish significant changes in the near future. If the bills pending now do not pass, they will die. It would then be incumbent on Legislators to re-draft and re-submit the bills in the new Legislative session next year. Senator Walters explained that pension reform may appear easier to do at the local level because local governing bodies are typically non-partisan, but at the State level, it is much more political, much more partisan, and therefore, much harder to achieve significant change.
There are a few bills pending that would place a measure on the State ballot to ask California voters to approve Constitutional amendments effecting public retirement systems (SCA 13, 18, and ACA 22). While those bills are still active, it appears the time has passed for any measure to make it on the November ballot. Some bills are contingent on the approval of those Constitutional amendments, and therefore, will likely die this Legislative session, as well (see AB 2224 and SB 1176). For the remainder of the bills that are still active, many have had no action on them in months. One topic that has spawned a number of bills, forfeiture of retirement benefits for felony conviction of conduct arising out of performance of official duties or in seeking wages or retirement benefits, may still have a chance (see AB 169, AB 1653, AB 1681, SB 1057). Two bills propose to place a maximum amount on the retirement allowance that may be received by an annuitant which will depend on whether Social Security was earned on the public service and the compensation limits set by the IRS (see AB 1633 and 1639). Two other bills propose to prohibit a person first elected to a local office after January 1, 2013 from attaining membership, or acquiring service credit in, a public retirement system, as well as earning other benefits such as retiree medical, health insurance, or car/office allowances (see AB 2428 and AB 2429).
While local agencies are being asked to initiate local ballot measures like those in San Jose and San Diego, the reality is, if the agency belongs to PERS, STRS, or a ’37 Act system, any real effective change must happen at the State level.