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Cutting public pensions now won't save California

In the long run, however, pension reform makes political and budget sense, and Brown has grabbed the initiative away from Republicans.

April 11, 2011|George Skelton | Capitol Journal

-- Prohibit pension "spiking" by basing benefits only on base wages — no overtime or unused vacation — during the three highest consecutive earning years. State pensions now are pegged to a three-year average, but many local governments calculate retirements on the single highest year.

-- Offer employees a "hybrid" system of reduced pension pay combined with a 401(k)-type plan that they could cart with them to a private-sector job.

Republicans insist on making a hybrid system mandatory. Brown's proposal "assumes public employees will volunteer for lower benefits, which ignores reality," asserts Senate Republican Leader Bob Dutton of Rancho Cucamonga.

"We're far from locked in concrete," Morgenstern says.

The biggest criticism of Brown's plan is that the key changes would affect only new employees.

Morgenstern replies that altering prospective benefits for current workers is legally questionable. "We could say we're going to do that and win some political points and wind up in courts forever," he says. "It's a long shot."

But it's a shot Brown should take. There would be big budget benefits in the future, even if absolutely none right now.

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