Posts Tagged ‘California pensions’
Well, that’s not what Jerry Brown and legislative Democrats claim their bill would do, but how can we doubt that wouldn’t be the effect. Here is what they are claiming, as reported in the SacBee:
The goal is to create a savings program in which workers who have no access to a pension can count on a guaranteed rate of return for contributing about 3 percent of their salary.
Sounds laudable? But who will control the money? Who will guarantee the rate of return? According to the article, private insurers would, because:
In the 2010 San Diego City Council race, and in previous mayoral campaigns, the idea of bankruptcy for San Diego has been proffered. However, neither Vallejo, which survived bankruptcy, nor Stockton, now going through bankruptcy have demonstrated that public employee pensions can be discharged in bankruptcy court, at least in California. In California, after the Vallejo experience, the state passed laws requiring that cities contemplating bankruptcy enter into a mediation process. This requires that the city negotiate in good faith with creditors prior to entering bankruptcy proceedings. One group for whom there is no negotiation are the labor unions pensions. From Reuters:
As a matter of fact, if there was some real pension reform, there wouldn’t be any need for tax increases. California is drowning under the burden of employee pension costs. Even the modest reforms offered by Jerry Brown are making no progress in the
Democrat union controlled legislature. A couple of key parts of his proposal:
- Equal sharing of pension costs: Require all new and current employees to contribute at least 50 percent of their retirement costs, shifting the burden from public employers, some of whom currently make the entire contribution.
Posted on my blog: RiderBlog.NotLong.com
It appears that reality finally is coming to the arcane field of government pension accounting. So why should you care? Consider the following.
If (as the Dan Walters article below suggests) we start getting really serious about fully accounting for the unfunded liability of government pensions, bankruptcy can’t be far behind for many local jurisdictions.
BK or not (at this stage, I oppose BK for San Diego and most local jurisdictions), this sensible accounting step is GREAT NEWS if it becomes widely accepted. Real change will come only when it has to come.