The governor calls it "radical change," though it appears as if current workers won't see much difference. The Sacramento Bee reports that future hires will receive a more limited benefit package. Salaries used to calculate pensions will be capped at $110,000 for employees who have Social Security and $130,000 for those who don't. New employees will pay half of their normal pension costs, though current workers would still be able to negotiate any increases at the bargaining table. The retirement age for most state workers will be 67 (for maximum benefits), up from the current 62. Newly hired police and firefighters will be able to reture at 57. As we posted on Monday, there will be no hybrid plan, where defined benefits are combined with a 401(k)-style plan (a more effective way of bringing down long-term debt). During a press conference in L.A. this morning, the governor said the package would save between $18 billion and $30 billion over 30 years. But left unclear is how much of the savings will be backloaded. The package will be voted on at the end of the week. From Bloomberg:
Brown, 74, wants to cut pension benefits and curb abuses before he asks voters in November to raise income and sales taxes. A weak recovery from the longest recession since the 1930s, reducing job prospects and retirement benefits for most nongovernment workers, has churned up a backlash against the pay and benefits of public employees nationwide. "If voters think that legislators have made a serious policy change, then the chances for the tax increase improve," said Jack Pitney, who teaches politics at Claremont McKenna College in Claremont, California. "But if they think it is nothing but window dressing, then chances get a lot worse."
From the SF Chronicle:
Dave Low, chairman of a coalition that represents 1.5 million public employees and retirees, said the proposal will hurt "all Californians" by making it harder to attract and keep teachers, police officers and firefighters at work. "We are outraged that a Democratic governor and Democratic Legislature are taking a wrecking ball to retirement security for teachers, firefighters, school employees, and police officers. While we support common-sense changes to end spiking and abuse of the system, this package is unfair and wrong," said Low. "This is the largest rollback in providing a secure retirement to teachers, firefighters, and police officers in California history, reducing benefits to pre-Reagan era benefits. ... Public workers have done more than their fair share during the past several years of lean budgets, taking pay cuts, furloughs, and paying more for health care."