UCOP & Regents: Don't Say Later You Weren't Warned

Two initiative petitions were submitted earlier today. One, reproduced below, deals with pensions. It would explicitly cover UC and, thus, would override the pension changes enacted by the Regents last December. For example, it limits the final pension to 60% of final salary. It covers existing employees as well as new hires.

The second is essentially a revival of the old GANN initiative that was passed by voters shortly after Prop 13. The GANN limit restricted the rise in state spending (general fund plus other funds) to the inflation rate plus the growth in population. GANN was essentially gutted in the late 1980s by Prop 98 and a later related proposition that determined spending on K-14 by formula.

The pension initiative reproduced below, aside from overriding the Regents' decision, compromises the constitutional autonomy of UC. However, it is unclear what legal action the Regents or UC would take should it pass.

While it takes only $200 to file initiatives, typically another $1 to $2 million is needed to hire signature gatherers. Even if an initiative gets on the ballot, if it is controversial, tens of millions of additional dollars in TV and other advertising may be required to promote it.

The two initiatives that were submitted, however, appear to correspond to the positions taken by Republicans who have been negotiating with the governor over the "price" of their votes for his tax extension proposal. In turn, the governor has hinted that if he cannot reach a deal, he would go the initiative route which would likely mean a November election. It is probable that if the governor went the November-initiative route, the pension and GANN-type initiatives would also have sufficient money behind them to wind up on the same ballot.

The other possibility is that these two proposed initiatives are being presented to the governor as the blueprints of the price for the needed Republican votes. In that case, the initiatives may be variants on what the governor might agree to. Reports suggest that something along these lines is occurring in negotiations with the governor. See http://www.capitolweekly.net/article.php?1=1&_c=zl1ivz3w3mpn3x&xid=zl0x4me01b52yb&done=.zl0xrt3m4xw9f1&_ce=1301026117.d51e10cd825ba76daf2f7e3a35a5a294&_c=zl1ivz3w3mpn3x

As far as can be determined from public sources, UC has not weighed in with the governor concerning its position regarding the pension proposal. For that reason, I am reprinting the pension initiative below in its entirety so it cannot be said from this point on that no one at UCOP was aware of what was happening.

Large bold text has been added to pertinent elements in the initiative.

INITIATIVE MEASURE TO BE SUBMITTED DIRECTLY TO VOTERS

SECTION I. STATEMENT OF FINDINGS

A. Government has an obligation to provide adequate health and retirement benefits to its employees;

B. At the same time, government has a responsibility to its taxpayers to insure that such benefits are reasonable and adequately funded;

C. Pension benefits for existing employees are excessive and threaten the economic viability of state and local governments. A recent report by the State's Little Hoover Commission concludes, that the current system is fiscally "unsustainable;

D. Government finance experts have determined that the pension and retiree health provided public employees are significantly more generous than other states. It has been reported that more than 15;000 persons receive pension benefits in excess of $100,000 per year. Under the current system, some public employees can actually receive more income in retirement than they earned while working.

E, In the 1930's, our state established a retirement age for government employees
of 65. Now many government employees can retire in there [sic] 50's, notwithstanding a
much longer life expectancy. As a result, many retirees will receive a government
pension for more years than they actually worked for the government.

F. The current system has led to billions of dollars of unfunded liabilities for pension obligations of government employees. The taxes needed to adequately fund such benefits would crush the economy. The investment proceeds needed to fund such benefits are non-existent. Many local governments will be threatened with bankruptcy if no change is made right now .

SECTION 2. STATEMENT OF PURPOSE

A. The people hereby enact the "Public Employee Pension Reform Act" to;

1) provide fiscally responsible pension benefits for all government employees; and
.
2) Reform the excessive pension benefits provided to current government employees.

SECTION 3. Public Employee Pension Reform Act

Section 12 of Article VII of the California Constitution is added to read:

Sec. 12(a) Public agencies may provide reasonable pension benefits for all employees
hired after the effective date of this section, subject to all of the limitations of this section.

(b) Any plan providing for pension benefits for employees of a public agency who are
employed on the effective date of this section, shall comply with retirement age limitation
in subdivision (f)(1), whether enacted by law or by contract, notwithstanding section 9 of
Article I.

(c) This section does not apply to or limit disability benefits for public agency employees
or death benefits for families of public agency employees.

(d) Public agencies shall retain exclusive authority to modify the terms of pension, retiree health, or other retirement benefits provided to its employees and may not relinquish such authority in any employee contract or collective bargaining agreement.

(e) A public agency may not provide retroactive increases in pension benefits to any
public agency employee under any plan.

(e) A public agency providing pension benefits to its employees shall:

(1) provide for full retirement ages of all employees no less than 62 years of age;

(2) require a public agency employee to have been a full time employee of one or more public agencies for at least five consecutive years;

(3) limit retirement benefits for a public agency employee to no more than sixty percent (60%) of the highest annual average base wage of the employee over a period of three consecutive years of employment by a public agency. Any additional payment, including but not limited to, overtime pay, bonus pay, severance pay, and payments for accrued but unused vacation and sick days shall be excluded from calculating the annual average base wage.

(4) require the public agency employee to contribute an amount at least equal to the amount provided by the public agency to fund the plan.

(g) As used in this section:

(1) "Public agency employee" and "employee" mean a person who is or becomes a full-time employee of a public agency. [Italics added]

(2) "Public agency" means the state or a political subdivision of the state, including, but not limited to, counties, cities, charter counties" charter cities, charter city and counties, school district, special districts, boards, commissions, the Regents of the University of California, California State University; and agencies thereof.

(3) "Pension" or "pension benefits" means a plan or trust providing a pension, benefit determined by a formula based on factors such as age, years of service, and compensation, or a plan or trust.

(h) The Legislature may adopt legislation implementing this section and only to further
the purposes of this section by a bill passed by roll call vote entered into the journal, two thirds
of the members concurring.

(i) Nothing in this Section shall terminate, amend, modify or in any way affect the retirement benefits or other benefits provided Members of the Legislature pursuant to Section 45 of Article IV.

G) Nothing in this section shall repeal, modify, change or impair the pension benefits of
persons who are receiving or are entitled to receive such benefits as a result of that person's retirement from public agency employment prior to the effective date of this section.

SECTION 4. Severability

The provisions of this Act are severable. If any provision of this Act or its application is held invalid, that finding shall not affect other provisions or applications that can be given effect without the invalid provision or application.

SECTION 5. Effective Date

This Act shall become effective immediately upon its approval by the voters pursuant to Section 10(a) of Article II. No public agency may enter into any employment contract or collective bargaining agreement providing for retirement benefits in excess of the limitations imposed by this Act.

The initiative above is at http://ag.ca.gov/cms_attachments/initiatives/pdfs/i938_initiative_11-0007.pdf

The GANN-type initiative is at http://ag.ca.gov/cms_attachments/initiatives/pdfs/i937_initiative_11-0006.pdf

UPDATE: A subsequent blog post on the LA Times website makes clear what the strategy of the initiatives' backers is. "As Gov. Jerry Brown mulls his options on how to bring an election on taxes to the voters, Republicans are readying election measures of their own. GOP operatives filed two initiatives with the attorney general's office Thursday -- one to curb public employee pensions and another aimed at capping future state spending -- in the event Brown walks away from talks with Republican lawmakers and opts for a November special election." See http://latimesblogs.latimes.com/california-politics/2011/03/republicans-file-pension-spending-measures-just-in-case-talks-with-jerry-brown-collapse.html

FURTHER UPDATE: Brown: Unions should be open to GOP concessions

Associated Press. 03/25/2011

SACRAMENTO -- Gov. Jerry Brown said Thursday that he has told his labor union allies they should be open to concessions that Republican lawmakers are seeking on public employee pensions in exchange for GOP votes on the budget. The Democratic governor has warned that if Republicans fail now, conservatives could try for even bigger giveaways with a future ballot initiative. As if on cue, Republicans filed two such initiatives with the state attorney general on Thursday...

Full story at http://www.insidebayarea.com/top-stories/ci_17699183