Although most Californians have spent little time thinking about our state's public-employee pension systems, the debate about how best to fix them will have drastic consequences on city, county and state budgets for years to come.
Depending on which study you read, the burden of public-employee pensions on our state is somewhere between $60 billion and $500 billion. A wide range, certainly, but with a state general fund budget of around $86 billion, both numbers underscore the fact that California must act now to get control of our sky-rocketing public-employee pension costs.
That's the reason I've introduced Senate Constitutional Amendment 13, which would both address the gross abuses of the public-employee pension systems and reform the structure of these systems to ensure that they are actuarially sound and sustainable.
About 90 percent of California's public employees are part of one of the state's 10 largest public-employee pension funds. These systems generally provide defined retirement benefits based on years of service, age and final compensation.
Although the amount of money in pension funds fluctuates based on the economy and the strength of the markets, the benefits paid to retirees are fixed. That means that, during economic downturns like the one from which we're still recovering, taxpayers end up being on the hook because state and local government coffers have to pay anything the market doesn't cover.
The plan I've proposed would offer new public employees a hybrid between the defined-benefit plans most public employee unions have and the defined-contribution plans most private-sector companies offer. Employees would be required to contribute more toward their benefits and would have the additional opportunity to take advantage of a 401K-style plan they could manage themselves.
My plan would also end pension-spiking practices by requiring that benefits be based on an employee's highest salary, averaged over five years. Furthermore, pension benefits could be calculated based only on an employee's salary - not counting overtime, uniform allowances, car allowances, etc.
I've also proposed capping pensionable pay, a simple, direct way to end the outrageous payouts some public employees have gotten, which have made headlines while draining precious state and local resources.
Along with many other pension reforms my colleagues and I have proposed, I strongly believe these measures will help us implement a fair, cost-effective public-employee pension system and reduce pressure on state and local budgets so resources can be prioritized where they're needed most.
Certainly, these issues are very complex. And there's no easy fix to our state's massive pension crisis. But the simple truth is this: public-employee pensions are going to bankrupt our cities, our counties and our state if we don't act now to fix this broken system.
Depending on which study you read, the burden of public-employee pensions on our state is somewhere between $60 billion and $500 billion. A wide range, certainly, but with a state general fund budget of around $86 billion, both numbers underscore the fact that California must act now to get control of our sky-rocketing public-employee pension costs.
That's the reason I've introduced Senate Constitutional Amendment 13, which would both address the gross abuses of the public-employee pension systems and reform the structure of these systems to ensure that they are actuarially sound and sustainable.
About 90 percent of California's public employees are part of one of the state's 10 largest public-employee pension funds. These systems generally provide defined retirement benefits based on years of service, age and final compensation.
Although the amount of money in pension funds fluctuates based on the economy and the strength of the markets, the benefits paid to retirees are fixed. That means that, during economic downturns like the one from which we're still recovering, taxpayers end up being on the hook because state and local government coffers have to pay anything the market doesn't cover.
The plan I've proposed would offer new public employees a hybrid between the defined-benefit plans most public employee unions have and the defined-contribution plans most private-sector companies offer. Employees would be required to contribute more toward their benefits and would have the additional opportunity to take advantage of a 401K-style plan they could manage themselves.
My plan would also end pension-spiking practices by requiring that benefits be based on an employee's highest salary, averaged over five years. Furthermore, pension benefits could be calculated based only on an employee's salary - not counting overtime, uniform allowances, car allowances, etc.
I've also proposed capping pensionable pay, a simple, direct way to end the outrageous payouts some public employees have gotten, which have made headlines while draining precious state and local resources.
Along with many other pension reforms my colleagues and I have proposed, I strongly believe these measures will help us implement a fair, cost-effective public-employee pension system and reduce pressure on state and local budgets so resources can be prioritized where they're needed most.
Certainly, these issues are very complex. And there's no easy fix to our state's massive pension crisis. But the simple truth is this: public-employee pensions are going to bankrupt our cities, our counties and our state if we don't act now to fix this broken system.