Gov. Jerry Brown signs cost-cutting measure for public pensions
Gov. Jerry Brown signed legislation Wednesday aimed at cutting costs of public pensions by billions of dollars in the coming decades to create "a more sustainable system,'' but even some supporters say it falls short of what needs to be done to protect the retirement systems’ long-term solvency.
Brown signed the measure in Los Angeles surrounded by legislative leaders who scaled back the cost-cutting changes originally proposed by the governor last year.
“This is the biggest rollback to public pension benefits in the history of California pensions,” Brown said in a statement, adding benefits are being lowered "to what they were before I was governor the first time.''
The changes require public employees hired starting next year to work longer before they retire with full benefits, place a cap on their pension benefits and restrict what is counted to prevent abuses. Current employees will have to pay at least 50% of the contribution toward their retirement plan.
The state’s largest public pension plan, the California Public Employees Retirement System, estimates the pension changes will save between $42 billion and $55 billion over 30 years for the state and other employers who pay into the plan. In addition, the California State Teachers' Retirement System estimates its savings will reach $22.7 billion over 30 years. California’s various public pension systems estimate they are obligated to pay out about $164 billion in benefits in future decades more than there is funding to cover them.
"It was a meager reform that falls far short of solving California's brutal pension math problem," said Dan Pellissier, president of the group California Pension Reform, on Wednesday.
The pension legislation is supported by reform advocate Marcia Fritz, president of the California Foundation for Fiscal Responsibility, but she said more is needed. "It's the first statewide reform legislation that moves the pension needle the other way in the state's history," Fritz said, but added, "Municipalities will remain fiscally distressed for decades without more reforms.’’
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-- Patrick McGreevy in Sacramento
Photo: Gov. Jerry Brown discusses pension reform during a press conference last month. On Wednesday, he signed legislation to enact many of the changes he proposed. Credit: Kevork Djansezian/Getty Images.