Pension initiative via Internet

Former Assemblyman Keith Richman, R-Northridge, may use the Internet to gather signatures and raise campaign funds for a public employees pension initiative, a tactic used by President Obama in his successful campaign.

But first the Legislature would be asked to pass a measure, sponsored by the Howard Jarvis Taxpayers Association, that would reduce pension costs for new state and local government employees by increasing the retirement age and capping benefits.

Richman said the new initiative will be similar, with some minor changes, to an initiative proposed two years ago by the California Foundation for Fiscal Responsibility, an organization he heads.

An initiative that would reduce pension benefits for future state and local government employees is virtually certain to draw well-funded opposition from public employee unions.

A hard-hitting campaign by the unions caused Gov. Arnold Schwarzenegger to drop his support for an initiative Richman proposed four years ago that would have switched new public employees to a 401(k)-style investment retirement plan.

Then the unions, led by more than $50 million from the California Teachers Association, continued a campaign that led to voter rejection in November 2005 of all four of Schwarzenegger’s “Year of Reform” initiatives.

“We are working on it,” Richman said of the new initiative. “The difficulty has been raising money against the unions. So we are having conversations with people about using an Internet-based approach for our signature gathering and fundraising.”

Richman said another proposal to switch new state and local government employees from a guaranteed monthly retirement check to a 401(k)-style plan, with an individually controlled investment fund and deferred taxes, would not be “realistic” politically.

He said the new plan achieves the three main goals: cost savings, budget predictability and no new unfunded liability. Contributions would be reduced from about 15 to 5 percent of payroll, he said , less than the 6 or 7 percent for some 401(k) plans.

The Richman group’s plan of two years ago would cap retirement payments, which can now be as much as 90 percent of the final salary, at 60 to 67 percent of the final salary when combined with any Social Security payments.

The full retirement age for police and firemen, now often 50, would be increased to 55. Retirement for others, now often 55 to 60, would be increased to Social Security retirement age, 65 to 67.

Richman said Social Security eligibility includes medical coverage by Medicare, which would stem the growth of an unfunded obligation for state and local government retirees estimated by a commission last year to be $118 billion over the next 30 years.

“Our proposed initiative does not impact current employees or retirees,” said Richman. “Our position is that the promises that have been made to current employees and retirees should be kept.”

The renewed initiative drive comes as pension fund investment portfolios have been hit by the stock market crash. Some think that state and local governments will have to increase their pension contributions, reducing the money available for other programs.

The Center for Retirement Research at Boston College estimates that 109 state pension funds lost $865 billion between October 2007 and last month, about 30 percent of their value.

“Taxpayers will have to ante up,” Alicia Munnell, the Boston center’s director, told the Economist magazine.

The giant California Public Employees Retirement System, which administers 2,000 plans covering half of all state and local government employees in California, has warned that employers will have to pay more if the market doesn’t recover by June.

CalPERS estimates that the contribution rate, currently averaging 13 percent of payroll, could go up by an additional 2 to 5 percent of payroll. The increase would begin in July 2010 for funds covering state workers and non-teaching school employees.

Because of the time needed to make separate calculations for the large number of funds, said a CalPERS spokesman, a contribution rate increase for the local government funds would not begin until July 2011.

Outside of CalPERS, there are separate California public employee pension systems in 20 counties, 32 cities and 25 special districts. A few pension systems, notably San Diego city, were in trouble before the stock market crash.

The governor’s Public Employee Post-Employment Benefits Commission reported last January that the state’s pension systems were on average 89 percent funded, above the 80 percent some experts think is the minimum for adequate funding.

In an illustration of the sweeping impact of stock market volatility, the commission said that the average funding for the pension funds had soared to 118 percent in 2000 during a high-tech boom.

The chairman, Gerald Parsky, said the commission did not get into the issues of retirement age and benefit levels because they are determined by collective bargaining between the government agencies and unions.

The commission, sounding the alarm over the unfunded $118 billion retiree health obligation, made eight broad recommendations including independent analysis and coordination with Medicare that have for the most part been embraced by the unions.

On a web site responding to the Richman initiative of two years ago, Lou Paulson, president of the California Professional Firefighters, said the commission recommendations are “reasonable” proposals to ensure adequate pension funding.

“But instead of giving the governor and the Legislature time to act on these recommendations, unreasonable partisan ideologues like Keith Richman would rather punish firefighters and other public employees than seek fair solutions,” Paulson said.

At the local level, voters in San Diego in 2006 and in Orange County last November approved measures requiring that pension benefit increases be approved by voters, similar to a long-standing requirement in San Francisco.

Orange County Supervisor John Moorlach, who calls Richman a “hero” for tackling a difficult issue, said he has talked to wealthy potential contributors to a pension initiative campaign who are wary about spending money on a lost cause.

“It gets back to the same issue of people feeling nervous about funding something that the unions are going to come at en masse — not just in California but around the country,” he said.

Moorlach said passing more local measures requiring a public vote on pension benefit increases might build support for a statewide initiative. The Orange County measure got 75 percent of the vote, but had no union opposition.

Some union officials told reporters that the unions already have the benefits that they want. Moorlach said he thinks that some unions may seek more benefits and that unfunded retiree health care remains a major unresolved issue.

“Most of the big horses are already out, but there are still ponies in the barn,” said Moorlach.

Reporter Ed Mendel covered the Capitol in Sacramento for nearly three decades, most recently for the San Diego Union-Tribune. More stories are at 26 Jan 09

31 Responses to “Pension initiative via Internet”

  1. Dr. Mark H. Shapiro Says:

    We’ve all seen how well 401K’s have done over the past year! Now that private sector workers have seen their retirement security disappear on the altar of corporate greed, let’s make sure that public workers’ retirement security disappears as well.

    Great job Richman!

  2. Rob Florst Says:

    This is very typical of the response during hard times. When money is flowing in the private sector during the good times, people employed in the private sector and corporations could care less about public jobs or pensions as they are making the big bucks and wouldn’t take a public sector job if it was given to them.

    Then comes a downturn and things in the private sector start getting ugly. Rather than focus on fixing the problems greed-related problems in the private sector economy, folks who now covet and envy the public sector employees (that they had no interest in during the good times), now want to take away the benefits public employees worked so hard for over the years.

    It is a sad commentary but not unexpected.

  3. A new pensions initiative (and blog) Says:

    […] week, Mendel is reporting that former Assemblyman Keith Richman is circulating an initiative “to switch new state and […]

  4. Jill Bohn Says:

    Duh! Has he heard of SS GOP and Offsets? Let me see, you keep 2/3 of my SSA, now you reduce my pension, want me to use my (reduced) TSA to live on. And that’s after 43 years of teaching. If CTA was after you, I would be sitting in your office on a daily basis. Get real.

  5. Lynne B Says:

    Jill- it is SS GPO, not GOP and affects those who have a pension plan in which they did not contribute to social security. I am a retired local govt employee, 2% at 60 when I retired…now it is 2.7% at 55 or something, and public safety gets 3% 50- that is pure insanity. I knew when I first read about that a few years ago that was unsustainable. It is one of the big reasons the City of Vallejo filed bankruptcy. I have no solution except perhaps a 2 tier retirement system with reduced benefits for new hires. But please..don’t talk about a 401K, my husband works for a fortune 500 company and lost about 40% of his 401K in the past year..oh well, he didn’t really want to retire anyway

  6. Andrew B Says:

    Reading the HJTA newsletters and editorials must lead any reasonable mind to conclude they have a disdain for public servants. While I must agree with some of Lynne’s comments (i.e. public safety retirements,) I am very skeptical of any proposal from HJTA or similar.

  7. Richard Q Says:

    Public employees have for all of the last century been paid less than their private sector equivalents because the pension, which was unique to government service, was recognized as a part of the total pay. Private pensions are not of long standing but are new; private pensions were the children of the fabulous 50s. America as a culture made the bet that private pensions were better than public pensions because the big companies, GM, Ford, US Steel would always be there. We lost the bet.

    The reaction against public pensions ignores the fact that no great period of growth has ever been accompanied by chopping pay and pensions. Those great periods of growth were not created by stinginess in earlier times. Greed the supposed driving force of capitalism is not always good. While America may be the “richest” countries with a strong (often christian based even if not explicitly called christian) social net that encourages wealth but discourages greed now seem to be “winning”. Average height is often used as a proxy for monetary statistics. North Korea is doing less well than South Korea and that can be seen in the 2 to 3 inch difference in average height. Presently parts of Western Europe, those evil weak people, are taller than Americans. The Dutch have a few inches on us.

    Maybe we should look at what works as opposed to what our ideology says must work. Saying that nearly got Galilleo tortured, but then, he was right.

  8. Randall E. Says:

    Comments by Dr. Mark H. Shapiro are very disturbing. Unlike me, I am sure that he never had to work graveyard shifts, holidays, weekends, wear a badge and have bad guys try to shoot or stab him. I spend 30 years of my life with the daily threat of not coming home to my family. I also paid hugh amounts into the PERS retirement system and sacrificed many a pay raise for the City’s portion of their contribution. The “let’s make sure that public workers’ retirement security disappears as well” seems like an uneducated point of view. Especially if you have a “DR.” in front of your name. It should be a comfort to him to know that most police officers live less than 5 years after retirement.

  9. Lynne B Says:

    Randall- I am strongly pro-union, and I think that police officers have a stressful job and deserve compensation for that, but 90% pay after 30 years on the job? That is nuts no matter how you cut it. Basically you are paying a highly skilled, trained police officer NOT to work when he/she is as young as 51 or 52 years of age. If you remove commuting costs, uniform maintenance, meal expense- it might be more lucrative to retire than to remain employed. Deals like that cause animosity from the public, the vast majority of whom work in private sector and at most get a 401K, frequently without an empoyer match. I think in the case of public safety employees that retirement package may well cause long term damage to their image, and their chances of getting pay raises or improved benefits. You will (through no individuals fault) become a poster child for greed

  10. Jill Bohn Says:

    Please understand that if I retired from Pennsylvania, I would receive both my Social Security and my Teacher’s pension, plus my wife’s allotment. However, having moved to the Golden State, where they threw out the baby with the bath water, my Social Security is reduced and I am not entitled to any of my husband’s benefits when he dies. There are 15 states in this position. This is also going to be a real stumbling block in recruiting “second career” scientists and mathematicians from industry. They will take a real hit on their pensions and their paychecks.

    May I also say hat when I worked in private industry (where I added to my Social Security) I didn’t have to fund my continuing education and degrees. The company paid for it and gave me time off to attend. When computers were required, the company provided them. My computer at school is 8 years old. I have had parents donate newer ones!

    Finally, if I leave one school and go to another, typical placement is credit for 5 years experience. Hello- do you hire an engineer or designer or HR person with no experience because it’s cheaper that hiring an experienced person?

  11. Rob M Says:

    The reason for the retirement age at 50 or 55 in safety employees is due to the increase in injuries after the age of 50. I dont think many police officers or firefighters would be able to keep working on the street past the age of 55. These are both jobs where a high number of injuries occur. Most of us hope to be able to stay healthy enough to make retirement age.

  12. Peggy Peter Says:

    I think we should clean up all the benefits the illegals are getting and ship them all back to their own countries. The employers that are paying the illegals cash should be paying hudge fines. Those people are NOT paying taxes.

    Taking from our retirement is crazy and very unfair. Those of us that work,live, and pay taxes in California should not be carrying the burden of the short fall of our budget. With the population in the working field here in this state, we should not be having a budget problem.

    According to the LA Times, 2% of the illegals are working in the fields helping to feed all of us. What is happening with the other 98%?

  13. Lynne B Says:

    Rob, that’s not the reason that 3% at 50 came about. It was due to two things. 1. a huge surge of support (almost hero worship) toward public safety after 911 which created an environment where better pay and benefits were the rule rather than the exception and largely supported by the taxpayer. 2. The irrational exhuberance of PERS which was playing with its funds as though it was ‘monopoly money’. PERS initially paid most if not all of the local agency contribution for 3% at 50, then they lost a ton of $$ and shifted this to the individual agency which ended up paying 25-28% of wages to support that boondogle. As far as injuries post 50- public safety has always had the best disability retirement deal of any employees- 50% completely tax free in the event of work related disability or injury. Kudos to the men and women who got 3% at 50, but it is unrealistic to think that new hires can expect this- I think that unions who try to insist upon that rather than advocating a 2 tier system will see a rollback in the retirement formula for all employees.

  14. Brian R. Says:

    I appreciate the fact that I have a safety retirement. It was created many years ago solely for our police and firefighters. We need to keep it that way. Why are DMV employees and Judges eliglble for a safety retirement?
    Don’t blame police and firefighters for the increased costs.

  15. craig adams Says:

    First of all– Judges do not have safety retirement in Ca.

    second, this article is misleading. Right now on the secy of State website in Calif. you can see a new initiative that proposes to allow for the renegotiation of all gov pensions. This proposal would allow it for current employees, future employees and even current retirees! The triggering action would be if the local gov agency/gov body chose to renegotiate. This will be nuclear war.

  16. keithlj Says:

    Peggy Peter

    If you make it to Seattle or Washington State we would let you work on an initiative which would help in getting the illegal immigrants to not have jobs. See

    If the pension plans were able to let homeowners free up their own assets and put additional funds elsewhere I have a plan to get the economy growing instantly and get the oil barrons from overseas out of our pockets. See under I guess I will just look for it under my word and post it as current.

  17. craig adams Says:

    A sad feature of all of this is this; The US Constitution’s contract clause will prevent anything like this from ever reaching fruitiion– but,. if it passes here in our state, which of course does nothing to abrogate the federal constiutution’s supremacy, millions will be wasted paying lawyers to litigate this forgone conclusion….sad…another waste by misguided zealots…

  18. keithlj Says:

    Peggy Peter is right. Recently an illegal immigrant was found to not have paid $8 Million in taxes to Oregon from a business which generated $28 million in Sales. The amount of taxes not collected for the State and other various federal taxes to employees who did not pay taxes can be astonomical. But I am sure this scenario is repeating itself many times over across the country. One estimate I saw was illegal immigrants cost our federal government $338.6 Billion in lost revenues each year from the tax gap. In Washington State this amount is a touch over $500 Million per year. With a usual debt $338 Billion would balance the debt. The IRS figures $344 billion in underpayments from tax cheating and $54 Billion in audits that bring in some of the difference. I am sure California has similiar numbers.

  19. klambro Says:

    Let’s not forget that when times were good; many cities were not paying their contributions to PERS on a regular basis because investments allowed them to defer. Had citites been applying their contributions all along (sound fiscal planning) we wouldn’t be seeing the “burden” as it is called, today. I agree entirely with the comment that when times are good; private sector employees wouldn’t take a public job if given it; reverse the economic outlook and jealousy rears it’s ugly head. Don’t worry; the ecomomy WILL turn around and when that happens public employees will be back in the shadows doing our jobs and not complaining that the private sector reaps the rewards of a bull market…Most of us do what we do because we love it. We sacrafice our bodies for a cause and to punish us for the short sightedness of others is simply vendictive.

  20. StevefromSacto Says:

    The great Keith Richman! The man who was pushing a plan that would have eliminated survivor and disability benefits for the families of fire fighters and police killed or injured in the line of duty. His plan was so bad that even Arnold dropped it like a hot rock. So I can only imagine how state-of-the-art his new online plan to screw public employees will be.

  21. Dave B. Says:

    This is a long fought Republican big business ploy. Big business was an abysmal failure at running pensions, they lied and did not make deposits,they raided their funds and when that money ran out, they bought other companies and raided their pensions until the government stopped them. Now, they want to disolve public employee pensions because we make them look bad. PERS took the state to court to stop being raided back in the 90’s. PERS has a 200Billion + surplus and has adjusted actuaries to even out the dips in the stock market. It is one of the last truely solvent pensions and Corporate America can’t stand it. Richman, your cronies bankrupted their slave employees chance for retirement with the 401k, Leave your mitts off my pension.

  22. keithlj Says:

    Government PERS pensions may have money in them but they are classified as unqualified pension plans because the money going into them is spent currently. The individual pensioner does not have an account with money in it. If the actuarials do have funds for future needs that is exceptional. But Dave B’s premise that pension plans are dipped into is untrue. The government law dictates anywhere from a 75% to 125% funding of the pension plans. Depending upon the cycle and the cash flow a company might excellerate a negative income and expense or profit and loss sheet by catching up on the pension plan and funding at the 125% level. The stock goes down naturally and late they will underfund so the stock goes up and they get a bonus. The sheets look like the company is making more money. The same is during the good times in reverse. A company might underfund so the bottom line looks better and a rising stock promotes bonuses for the executives. Later when times continue they might fund more of the pension plan. It is the law and it is manipulative. The bonuses unfortunately are not shared by the grassroots employees.

  23. Bull Says:

    This article looked quite promising until I came ascross the following … Quoting …”Our proposed initiative does not impact current employees or retirees,” said Richman. “Our position is that the promises that have been made to current employees and retirees should be kept.”

    THIS is a BIG PROBLEM from 2 perspectives:

    (1) If you only change the Pension & Benefits for NEW employees, you will see no real CASH benefit for 20+ years (We’re broke NOW). Sure, it will slow the increase in future liabilities 20 years hence, but offers NOTHING now.

    (2) Civil Service Pensions & Benefits are funded by TAXPAYERS, and although Civil Servants are also taxpayers, they get ALL the benefits (of the overly rich pensions & benefits) while paying only 10% of the cost (since they represent about 10% of all TAXPAYERS). In Private Plans, it is ROUTINE to reduce CURRENT employee pensions unless the employee ALREADY meets substantive age & service markers (such as already being employed for 20+ years, or being employed for 10 years AND already age 50+). Since these Private Sector workers FUND Civil Servant pensions & benefits AND routinely have THEIR benefits reduced unless VERY close to retirement, WHY are such reductions always consideded “off-limits” for Civil Servants? They SHOULDN’T BE.


  24. StevefromSacto Says:

    BULL doesn’t believe that “promises made should be promises kept.” Gee, would any of you want to do business with someone like that?

  25. Bull Says:

    To “STeve ….”: I wish all promises could be kept. In the real “Private Sector” world, pension & benefit “promises” are broken ALL THE TIME, because the “promises” are not legal requirements. Private Sector plans have been so structured to give companies the flexibility they need in bad times (such as the current situation in the auto industry today), not that some haven’t abused this for grrey intensions.

    For some reason, in the “Public Sector” world these “promises” must be kept even those the recipiants of these promises only pay for a very minor share of their cost.

    Doesn’t seem fair to me ….. you need to EQUALLY share in the burden….. not more-so, but not less either.

  26. Carl LaFong Says:

    I think we can look no further than Detroit to see that some of the state benefits are out of whack. We ignored it for years with the auto-manufacturers and now they in it deep. For any state worker to work 20 years and get near full-pay to retire is quite insane. The argument that the job is dangerous is solved by supply and demand. If that person doesn’t want the job – there are many others who do.

  27. StevefromSacto Says:

    “…the recipiants of these promises only pay for a very minor share of their cost….”

    For your information, Bull, public employees pay a larger share of their pension than the taxpayers do. Out of every pension benefit dollar, 75 cents comes from investment income from CalPERS, 13 cents comes from employee contributions, and just 12 cents come from the employer (state or local government.

    Despite right-wing denials, the fact remains that public employees receive less compensation than their counterparts in the private sector for doing the same jobs. That’s why governments have offered public employees better benefits in return for lower pay. But now you want to break that commitment.

    As to EQUALLY sharing the burden, I don’t see any burden-sharing in the governor’s latest budget by large corporations or oil companies or the well-to-do and well-connected. All his budget contains is cuts to programs that are vital to Californian’s most vulnerable citizens, like CalWorks, Medi-Cal and IHSS.

  28. Lynne B Says:

    StevefromSacto says: “..of every pension benefit dollar, 75 cents comes from investment income from CalPERS, 13 cents comes from employee contributions, and just 12 cents come from the employer (state or local government.”
    Not quite true Steve..the numbers vary according to the locality, but for at least one Northern California Police Department (Vallejo) the employee’s contribution to PERS is 9% the Cities obligation to PERS in 2008 was 27.13%, since most police officers make well over 100K a year (which sort of defeats your argument about better benefits for lower pay, it appears that Vallejo Public Safety seems to get the best of both) there is ittle question as to why Vallejo is now bankrupt.

  29. StevefromSacto Says:

    This propaganda about fat cat public employees is sickening. For every public employee you can find who makes more than $100K, I can find you a thousand who make less than $50,000 a year.

    The average pension paid out by CalPERS is around $20,000 a year for about 20 years of service. That is adequate (if the person also receives Social Security), but it certainly isn’t a windfall.

    As to your situation in Vallejo, how much do you think a police officer or firefighter should be paid? Then, imagine that someone is breaking into your home or yhour house is on fire and try again.

  30. Lynne B Says:

    Steve, I’m not trying to pick a fight with you…I just tried to provide you with some data. How much do I think a firefighter or police officer be paid? Not the $74.93-$103.61 per hour (total compensation) that they get in Vallejo. I think that a position is underpaid if you can’t get qualified applicants to apply and stay with the agency once hired, Cities that pay far less have no problem with recruitment or retention. I agree their job can be stressful and sometimes dangerous; but if you look at charts for injury/mortality rate by occupation, you will see that several other jobs are statistically ‘more dangerous’ but they are paid far less than VPD. And I understand what the job of a police officer entails, I worked in law enforcement and corrections for over two decades – I also know that when a wage/benefit package becomes so burdensome that the City files bankruptcy, there is a problem…

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