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Gov. Jerry Brown to unveil 12-point pension overhaul

Brown will propose benefits for new state workers that combine elements of traditional pensions with a 401(k)-style savings plan. He says the state can no longer afford its current retirement system.

October 27, 2011|By Anthony York and Michael J. Mishak, Los Angeles Times
  • Some components of Jerry Brown's plan would require voter approval, but the governor is expected to first ask the Legislature to approve most of it and place the rest on the November 2012 ballot.
Some components of Jerry Brown's plan would require voter approval,…

Reporting from Sacramento -- Gov. Jerry Brown will unveil a 12-point plan to overhaul California's strained public retirement system Thursday, proposing benefits for new state workers that combine elements of traditional guaranteed pensions with a 401(k)-style savings plan, according to people briefed on the matter.

Brown will also propose raising the age at which most new state employees can get full benefits, from 55 to 67.

Details of the governor's plan were provided by labor leaders who received an outline of the proposal from him late Wednesday. They spoke on condition of anonymity because Brown asked them not to reveal details to the media.

Brown, who has said the state can no longer afford its current pension system, will release his plan at a news conference in Sacramento. Spokesman Gil Duran refused to confirm details of the proposal, saying only: "The current system is not sustainable. I think the governor made that clear back in March," when he released an outline of his suggested changes.

While some components of Brown's plan would require voter approval, the governor is expected to first ask the Legislature to approve most of it and place the rest on the November 2012 ballot, the sources said. A legislative committee is also studying the issue, devising recommendations for pension-related bills that could be offered next year.

Additional components of the governor's proposal adhere closely to the outline he released in March, in the middle of budget negotiations with a handful of Republican lawmakers. For example, Brown will ask legislators to take steps to end "spiking" — giving workers pre-retirement raises to boost their pensions.

He also wants to prohibit retroactive pension increases and eliminate "air time" — employees' ability to buy credits for years they have not worked.

Brown is also hoping to reconfigure the boards of the state's two largest retirement systems, which have come under GOP attack for being too friendly to labor and lacking sufficient input from financial experts. Brown is said to be sympathetic to some of those criticisms. But voters would have to approve any new arrangement, so he would have to persuade two-thirds of state lawmakers to place the measure on the ballot or find millions of dollars to qualify it through signed petitions.

Labor groups indicated they were unwilling to pick up the tab for such an effort.

"Our unions aren't going to put up a penny for a pension initiative," said Dave Low, chairman of the Californians for Retirement Security, a coalition of labor groups fighting to preserve existing public-employee benefits.

Republican lawmakers, though they had not yet been briefed, said Wednesday that they were skeptical the governor would go far enough to solve what they see as a growing problem for state and local governments. But some said they hoped Brown's proposal would eventually incorporate Republican ideas.

"I'm hopeful that we will be able to blend the differing plans into something meaningful," said state Sen. Mimi Walters (R-Laguna Nigel). "I am cautiously optimistic that … we will be able to find some common solutions."

Brown has already embraced a Walters bill that would end "air time" credits. He is also pushing to ban pension payments for anyone convicted of a work-related felony. That is the subject of a bill introduced by another Republican state senator, Tony Strickland of Moorpark.

Marcia Fritz, president of the advocacy group California Foundation for Fiscal Responsibility, said Brown would have to go after benefits for existing workers more aggressively to save the state and local governments from future financial disaster.

"You absolutely have to do something significant with current employees," she said, warning that a failure to act could cause a public debt crisis like the one threatening the European Union. "What the governor is doing is better than nothing, but unless he gets bolder, we're going to go the way of Greece."

The governor's plan could test his relationship with his labor allies. Steve Smith, a spokesman for the California Labor Federation, noted that public employee unions have already agreed in recent years to such concessions as forcing members to pay more toward their pensions and reducing payouts for new workers. But he conceded that the public may want more.

"The Republican attack on pensions has been largely hyperbole, but it's also been effective," he said. "They've scapegoated public employees for a lot of the state's problems, unfairly. But when you have Republicans all around the state on the same message for years, that's going to have an effect."

Walters called for the partisan rhetoric to be ratcheted down.

"I believe it is critical that we put aside our political prisms," she said, "and really focus on finding fiscally responsible long-term solutions."

anthony.york@latimes.com

michael.mishak@latimes.com

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