Moorlach wants to take pension reform back to the future
There isn’t anything fundamentally significant about 1990, from an ecological standpoint. Nonetheless, California officials long ago set that year as the benchmark against which greenhouse-gas-emissions reductions are judged in efforts to deal with climate change.
Assembly Bill 32, passed in 2006, requires the state to reduce such gaseous emissions to 1990 levels by 2020. Last year, the governor signed Senate Bill 32, which requires the California Air Resources Board to develop rules to roll back greenhouse gases to 40 percent below those ’90 levels by 2030.
AB32 and SB32 are those rare, significant pieces of legislation widely known just by their bill numbers. For the state’s Democrats, they signify California’s trend-setting efforts to battle global warming. For Republicans, they usually mean the implementation of some of the nation’s most cumbersome and costly business regulations.
But now state Sen. John Moorlach, R-Costa Mesa, is having a little fun at the other party’s expense. He introduced a bill that also is named SB32 (hey, it’s a new legislative session). It also is based on a similar backward-looking approach. The legislation deals with his pet issue of unfunded public-employee pension liabilities, which continue to consume local government budgets and rack up a worrisome amount of public debt.
Moorlach wants to bring such debts back even further, to 1980 levels, modeling his pension-reform approach on the state’s greenhouse-gas-reduction approach. It’s clever, provided anyone in the Capitol appreciates the parallels. Unfortunately, the majority party is more interested in being on the cutting edge when it comes to spending public dollars and regulating private businesses than when it comes to getting the government’s own house in order.
At this early stage in the legislative session, the bill includes nothing more than intent language. The bill refers to the Public Employees’ Pension Reform Act of 2013 (PEPRA), which was a modest effort by the governor and Legislature to rein in pension costs. SB32 then announces its intention to “resume the public employee pension reform” that started with that 2013 law. There are no specifics, but Moorlach’s fact sheet goes into detail.
Some of the bill’s ideas were originally floated by Gov. Jerry Brown when he proposed pension reforms in 2012. The governor never fought for the tough items on his agenda, however. Critics argue the 2013 PEPRA law was more about politics than reform. Brown was asking voters to approve an initiative to raise sales and income taxes. But soaring pension debts were front-page news and public trust in the state’s governance was flagging. The leadership offered this as proof it was reform-minded and could be trusted with more cash.
Taxpayers were played for fools. As soon as the tax hike passed, legislative interest in pension reform evaporated. But the problem hasn’t gone away. When I talked to Moorlach last week, he mused at how the two of us have been having the same conversation about exploding pension debt for nearly a decade now. Instead of fixing itself, the liabilities are rising and the California Public Employees’ Retirement System (CalPERS) now is only 68 percent funded. The problem is getting worse, and the bill is designed to highlight the growing problem.
SB32 will include a variety of sensible approaches. It would freeze cost-of-living adjustments until CalPERS and the California State Teachers’ Retirement System (CalSTRS) are at 100 percent funding levels. It would force pension boards to reduce retiree-medical costs. It would create a citizens’ oversight committee to highlight pension liabilities. It would force CalPERS to reduce the number of “special compensation” categories, which is a fancy term for the way some employees spike their pensions in their final years.
There are other good ideas. The bill would offer as an option a hybrid plan that combines traditional pension elements with 401(k)-style benefits. It would limit the number of highly pensioned “public safety” jobs, thus assuring that only those who truly are in harm’s way receive the benefits, rather than, say, billboard inspectors and myriad other low-risk employees, as is the case today.
The kicker is found in this fact-sheet bullet point: “Require CalPERS to reduce its unfunded liabilities to 1980 levels; to be achieved by 2030.” This is the same model as supporters of the greenhouse-gas-reduction law used. In 1980, the CalPERS unfunded liability was closer to zero. Now it is $169 billion. The debt keeps getting worse.
Moorlach knows the bill has maybe a one-in-1,000 chance of passing in a Legislature dominated by Democrats closely allied with the state’s public employee unions. But it might provide some needed attention to the state’s pension crisis.
If California officials can try to take on the climate of the entire planet, why can’t they tackle their own pension mess? Backers of these climate-change laws have the right idea. Maybe the best way to move ahead is to start looking backward.
Image by Usa-Pyon
