Monday, May 14, 2012
Fork in the Road on Public Pensions in California?
1) The Regents adopted pension changes - essentially a two-tier defined-benefit approach - for the UC retirement system.
2) The governor is pushing a 12-point "hybrid" system (mix of defined benefit and defined contribution) for all public pensions in California that - unless UC is exempted - could override the Regents' action.
3) Although it is the official position of UC that it wants an exemption, the governor has not agreed to one.
4) The legislature has not cooperated with the governor and has been pursuing its own version of pension changes. To get his plan adopted, the governor needs either to have the legislature put it on the ballot or to go the initiative route.
5) GOP legislators filed an initiative containing the terms of the governor's plan but they do not appear to have the money to get the signatures needed to put it on the ballot.
6) There is a proliferation of local ballot propositions modifying local public pensions. You can find a review of the latest developments in today's calpensions.com at:
7) The governor seems to believe - based on statements he has made - that ultimately public sector unions will prefer his plan to the local propositions and will then push the legislature to cooperate with his hybrid plan as the lesser evil.
It is true that we seem to be coming to a fork in the road due to the local propositions. What happens at that point is not clear. The governor might be right. But, on the other hand, since the local pension plans do not necessarily accord with the governor's plan, a proliferation of such local plans might create pressure not to adopt a statewide, one-size-fits-all solution. If such pressure develops (to leave it to local solutions), in particular UC's pension modifications made by the Regents would not be overridden by some statewide proposition.
Yogi Berra is supposed to have said, "When you come to a fork in the road, take it." Not clear, however, where we will end up in this case: