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THE NOONER for October 28, 2011

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DISTRICT UPDATES

  • CD52 - Removed Bob Nascenzi (D)

THE HEADLINE: BROWN RELEASES BOLD PENSION PROPOSAL: IRKS FRIENDS, WOOS FOES

THE PROPOSAL: 

Here is the governor's 12-point pension plan in what I hope is a fairly abbreviated list (full details):

  1. Equal sharing of pension costs - transition to 50%/50% sharing of employer/employee contributions (current and new employees)
  2. "Hybrid" risk-sharing pension plan - pension, social security and 401(k) combination targeted at 75% of final comp (new employees)
  3. Increase retirement ages to 67 and something in between 50 and 67 for public safety employees (new employees)
  4. Require three-year final compensation to stop spiking (new employees)
  5. Calculate benefits based on regular, recurring pay to stop spiking - only normal rate of base (new employees)
  6. Limit post-retirement employment - limit all employees to 960 hours of post-retirement employment (current and new employees)
  7. Felons forfeit pension benefits for acts during official duties (all employees)
  8. Prohibit retroactive pension increases - prohibit the change of retirement formula for previously served years (all employees)
  9. Prohibit pension holidays - prohibit retirement boards from suspending employer and/or employee contributions in good years (all employees)
  10. Prohibit purchases of service credit (all employees)
  11. Increase pension board independence and expertise by adding two independent members of the public
  12. Reduce retiree health care costs - require state employees to work 15 years (rather than 5) to begin to earn retiree health benefits, and require 25 years of service before maximum state contribution. Encourage local governments to adopt similar provisions. (new employees)

THE ANALYSIS: Jerry Brown is rewriting his first-time legacy, may not run for a second term, and is serious about pension reform and willing to go against his labor allies to get it done.

THE REACTION FROM DEMOCRATS: We appreciate the bold proposal and will study it.

THE REACTION FROM REPUBLICANS: Let's vote (or, make Democrats vote) on it now! 

THE REACTION FROM LABOR: No way, no how. The governor is throwing public employees under the bus.

THE REACTION FROM POLITICAL CONSULTANTS: What the hell do we do with this?

THE POLITICS: The big question yesterday from Democrats was why the governor insists on making this an issue next year, in the midst of the most uncertain election cycle any modern California politician has known. With top-two, redistricting and a wild presidential, introducing a very complex and highly personal issue that splits candidates from their benefactors is not popular. And, before you think this will only be a concern among Democrats, think again...

Republicans were generally complementary toward the governor's plan. However, the biggest losers under the plan would be public safety employees, many of whom plan to appear in uniform on Republican mailers next year. These employees (including district attorneys) are the biggest beneficiaries of the current plan, and would see a dramatic drop in benefits and a dramatic increase in contributions. It won't take long for them to mobilize and Republicans could find their law and order support dissipate if the GOP gets too excited about the plan.

THE COP EXAMPLE: While not all the details aren't out, we can take an example of a police officer earning $75,000 and $25,000 in overtime/other comp, a reasonable and lower end number in my city of Davis. The officer is currently not making any pension contributions and accruing pension service at 3% of the $100,000 creditable compensation for each year of service. Starting at age 25 and retiring at age 50, the officer will earn 75% of final compensation, or $75,000 per year from CalPERS alone. Social Security would come in on top of that at 62 or 66, depending on when she started drawing it.

As I mentioned, our police officer isn't currently contributing anything for her pension. As with most cities, Davis pays both sides, for a total CalPERS contribution of 32.907%, or $32,907 of her $100,000 creditable compensation. 

By "phasing" in a requirement that employees pay 50%, our police officer is going to see her "real compensation" be reduced by $16,453, perhaps phased-in as salaries go up. I don't see her as a real happy camper about this, particularly with the general feeling that public employees have already made concessions. 

Meanwhile, the new police officer who is replacing her apparently would be capped at earning only 1/3 of her pension from CalPERS under the hybrid system. For the same category of employee who is newly hired, that would be a reduction of $50,000 per year from the current pension formula, with only $25,000 of the $75,000 annual retirement benefit coming from the defined-benefit program.

These are simple examples on the low end, and the vast majority of cops and firefighters would feel a much bigger current and future pinch, depending on implementation.

If this package makes it through the legislature, it will change. There is no way Democrat OR Republican votes will be there for this dramatic of a cut to pension benefits for cops and firefighters in any election year, let alone this highly dynamic one. Remember the SB 400 votes, with Republican votes gathered by CCPOA and cops.

Conceptual rhetoric in October is very different from votes when men and women with guns and badges are standing at the gate outside of the Senate and Assembly chambers.

THE WINNERS:

  • Local governments, who would feel huge budget relief. That said, local governments are dominated -- both at the elected and employed levels -- by public employees, who will be less concerned with long-term budget benefits when they feel their retirement benefits are at risk.
  • 401(k) providers, which, if they can beat CalPERS for the defined contribution piece, that's over 300,000 full-time employee customers
  • Anti-tax groups

THE BUDGET STRATEGY? The governor could tie pension reform into the budget and refuse to sign a budget unless the Legislature places pension reform on the ballot. Under Prop. 25, he has the Legislature by the, ahem, and is basically their boss determining when they will get paid. Of course, Controller (and want-to-be Treasurer) John Chiang may be more willing to declare a budget balanced and let the paychecks flow if it means winning labor praise. 

THE INITIATIVE: The governor suggests that if he can't get a satisfactory package through the Legislature, he will go directly to the voters. The question isn't whether he would be able to raise the $2.5-$3 million to qualify an initiative, but rather he is willing to take money from natural enemies. As a constitutional amendment, the measure would require 807,615, and a decision to bypass the Legislature and go to the voters would likely have to be made by early February to make it on the November 2012 ballot.

THE SKEPTIC: Dan Walters: Is Jerry Brown's Pension Plan Real Or A Ploy?

[disclosure: I am a local miscellaneous CalPERS member in a 2% at 60 formula, contribute 7%, while my employer contributes 13%]

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SEEN IN SACRAMENTO: Yesterday's Leadership California Institute gathered 37 candidates for Assembly at the Citizen Hotel, where they heard from former legislative leaders Jim Brulte, Bob Hertzberg, Curt Pringle, and Willie Brown. Of course, what happens at The Citizen stays in the ol' do-gooders building.

THE MAIN WHISPER: Okay...one piece...former Assembly Speaker Bob Hertzberg's passionate (and verbose) performance propped up the rumor that he is heading to Ventura to run in SD27 against Tony Strickland. This would leave Fran Pavley with three choices--stay and run (unlikely), head north to SD19 (she reportedly has a condo in Oxnard), or run in CD26 against Elton Gallegly and four declared Democrats. As the only woman with five men in the race, she'd be very likely to end up in the November run-off.

POLITICAL RADAR: The Republican Congressional Campaign Committee has added three Californians to its "Young Guns" category of candidates to watch: Kim Vann (CD03), David Valadao (CD21a), Gary DeLong (CD47)

HAPPIEST MAN CURRENTLY OUT OF POLITICS: Don Perata

PERMISSION REQUIRED: @jeanquan: "I was told I could speak at the speak out but that was cancelled. Hoping to speak at the general assembly tonight"

Seriously, as mayor of California's eighth-largest city, you have to get permission to speak in your main public square?

It's been a long week. I think I'll put my head on my desk.

eureka!, get us the news so we can blow this popsicle stand...

TOP HEADLINES ON AROUNDTHECAPITOL.COM AS OF 12:00PM
Jerry Brown's Pension Package Faces Skeptical Legislature
sacbee.com
Gov. Jerry Brown gestures Thursday toward a display of the 12 points in his plan to overhaul the state pension system. He will push for the Legislature to put the proposal on the ballot next year rather than try to qualify it through initiative petitions.

Labor Balks At Jerry Brown's Pension Plan
David Siders @
blogs.sacbee.com
Less than 24 hours after Gov. Jerry Brown briefed labor leaders on the major pension changes he will propose this morning, labor interests that helped elect the Democratic governor suggested he is in for a fight.

Dan Walters: Is Jerry Brown's Pension Plan Real Or A Ploy?
Dan Walters @
sacbee.com
Only Brown, who loves political chess, knows for certain whether pension reform is something he's willing to go to the mat to accomplish, or just a sacrificial political pawn.

Democrats drive drop in support for healthcare law in new poll
Noam N. Levey @
latimes.com
Public support for the new healthcare law dropped significantly in October, a new survey shows, dealing a blow to the Obama administration as Republican presidential candidates keep up their pledges to repeal the president’s signature domestic legislative achievement.

Gov. Jerry Brown Risks Backlash On Pension Plan
Anthony York and Michael J. Mishak @
latimes.com
The governor's proposed retirement system overhaul may lead to battles with fellow Democrats and public employee unions, his biggest supporters.

Jerry Brown wants voters to approve his pension overhaul plan
Jon Ortiz @
blogs.sacbee.com
Gov. Jerry Brown unveiled a 12-point public pension reform plan this morning that would ask voters to increase the age at which future state and local government employees could retire with full benefits and place them in riskier retirement plans than current workers.

Jerry Brown's pension plan explained
sacbee.com
Gov. Jerry Brown estimates his public pension reform plan would save the state $4 billion to $11 billion over 30 years and $21 billion to $56 billion over 60 years. Local government pensions also would have to comply and would save proportionately similar sums, the administration said Thursday.

Study: Use Red-light Cameras For Safety, Not Cash
Josh Richman @
ibabuzz.com
Outsourcing traffic enforcement to red-light and speed camera vendors can spell trouble for municipalities, according to a new report from a consumer watchdog group.

Congress: Bono Mack Says Husband's Senate Run
blogs.pe.com
Responding to questions about whether her husband's run for the Senate would change her own plans to seek re-election in 2012, Inland Rep. Mary Bono Mack said Thursday that nothing could be further from the truth.

The Retirement System Overhaul At A Glance
Anthony York @
latimes.com
Questions and answers about Gov. Jerry Brown's proposed changes to the state's retirement system

Brown's 'hybrid' pension proposal: guaranteed benefits plus 401(k)-style plan
Judy Lin @
mercurynews.com
SACRAMENTO -- Gov. Jerry Brown unveiled details of his pension proposal Thursday that seeks to move new California state workers to a hybrid system where guaranteed benefits are combined with a 401(k)-style plan and would raise the retirement age from 55 to 67 for civil workers, as union leaders

GOP Fights Senate Maps On A New Front -- Federal Government
Jim Sanders @
blogs.sacbee.com
A Republican-backed coalition that failed to persuade the California Supreme Court to kill the state's newly drawn Senate maps is now asking the federal government to reject the lines as a dilution of Latino voting power.

Gov. Jerry Brown risks backlash on pension plan
Anthony York and Michael J. Mishak @
latimes.com
The governor's proposed retirement system overhaul sets the stage for battles with fellow Democrats and his biggest supporters, public employee unions.

UC Davis Study Questions Link Of Fast Food To Lower-income Obesity
sacbee.com
Fast food alone cannot be blamed for high obesity rates among people with low incomes, according to a new UC Davis Center for Healthcare Policy and Research study.

CA lawmakers balance taxpayers, public employees
JUDY LIN, Associated Press @
signonsandiego.com
Gov. Jerry Brown on Thursday unveiled his plan for overhauling public retirement benefits requiring California lawmakers to tread carefully between protecting taxpayers and the public employees who serve taxpayers.

California Governor Offers Plan on Pension Costs
nytimes.com
Gov. Jerry Brown outlined a far-reaching proposal to reduce the cost to government of public pension programs.

Jerry Brown's pension package faces skeptical Legislature
sacbee.com
Even as Gov. Jerry Brown announced his plan Thursday to reduce pension benefits for public employees across the state, its prospects of passing intact appeared dim.

Brown's Own Allies Are His Biggest Foes In Pension Reform Fight
Steven Harmon and John Woolfolk @
mercurynews.com
Governors 12-point proposal earns praise from GOP, business leaders

California GOP Disclosed Donors Late, Common Cause Says
Jim Sanders @
blogs.sacbee.com
California Common Cause said today that it has filed a complaint with the state's watchdog agency alleging the state GOP violated disclosure laws in connection with a referendum drive to kill the state's newly drawn Senate districts.

Occupy Oakland Makes Plans For Citywide General Strike
Local @
insidebayarea.com
OAKLAND -- Occupy Oakland protesters debated Thursday evening the practical difficulties of organizing a citywide general strike with the aim of shutting down the city of Oakland on Nov. 2. Speakers urged teachers, students, union members and workers of all stripes to participate in whatever way they could, and said the entire world was watching Oakland. "Oakland is the vanguard and epicenter of the Occupy movement," said Clarence Thomas, a member of the powerful International Longshoreman and Warehouse Union who urged the hundreds of assembled people to support the strike.