Wave of Attacks on Public Worker Retirement Crests
Now that the state's public pension systems are reporting double-digit returns, hundreds of jurisdictions are settling pension issues at the bargaining table across the state, and courts are throwing out unlawful pension changes, it's no surprise that the attack on retirement security is losing steam.
CalPensions.com founder Ed Mendel reports that there are no pending ballot measures at either the state or local level in the state and that the “pension measure wave” has "crested." He also reports that court cases haven't progressed and, most notably, the San Diego case has cost that city's pension fund more than $3.2 million with zero savings to date.
Anti-pension crusaders were dealt another blow last week when a Monterey County superior court judge ruled that a measure to cut payments to CalPERS in Pacific Grove “violated the contract clause of the state constitution, reaffirming the view that pensions promised on the date of hire are a “vested right” that can’t be cut without providing a new benefit of equal value.”
CalPERS investments have hit a record high in 2013, erasing every penny of the investment losses it suffered in the market crash last decade. The pension giant has wiped out nearly $97 billion worth of investment losses it suffered in the market crash, and its portfolio has climbed to a record $261.7 billion. That surpasses the pre-crash high in 2007.
Recent polls found that voters rank pensions low on their lists of priorities and have grown less likely over the last two years to view pensions as too high. Voters also strongly oppose further reducing current employees’ benefits, and have expressed strong preferences for pension policies to be set through negotiations rather than at the ballot box.
“Public employees – firefighters, safety officers, school bus drivers, garbage collectors and so many more – are a huge part of why pensions are recovering,” said CPF President Lou Paulson. “Even after suffering years of pay cuts, concessions made by public employees have amounted to billions of dollars in savings.”
How much have public employees stepped up? More than 300 California cities, counties and local districts have increased employee pension contributions and lowered public costs at the bargaining table. Public employees have foregone raises, endured pink slips, dealt with increased workloads, and unequivocally supported efforts to curb pension system abuses such as spiking and creating pension reserve accounts for bad economic times.
Add to these concessions the massive rollback approved last year, amounting to a reduction of somewhere between $60 billion and $100 billion in the benefits promised to public employees. For example, before the law, a public employee making an average salary of $40,000 and working a 30-year career would have retired with a pension of $24,000. Now that worker will receive $15,600, a reduction of $8,400.
A recent study by the Center for Retirement Research at Boston College says that pension “reforms” made at the state and local level will restore the state’s public pension funds to pre-financial crisis levels.
“Whether it has been at the bargaining table in more than 300 jurisdictions or at the state level, public employees have been part of the solution to ensure public pension systems are financially sound,” wrote the study’s authors. Researchers also found “in most cases, reforms fully offset or more than offset the impact of the financial crisis.”
READ: "Pension measure wave crests, court slog remains", Calpensions.org
READ: Judge rules cap on employee pension contributions unconstitutional," Monterey Times-Herald
