Skip to comments.CA: Governor's pension plan gets chilly reception at Assembly hearing
Posted on 03/02/2005 5:51:43 PM PST by NormsRevenge
SACRAMENTO (AP) - One day after Gov. Arnold Schwarzenegger announced plans to push his pension overhaul campaign to the ballot later this year, an Assembly hearing into the proposed changes quickly showed more hostility among lawmakers than support.
The Democrat-dominated Committee on the Public Sector heard testimony from a Republican lawmaker and key Schwarzenegger official on privatizing the state's pension systems, but openly feuded with them, revealing the growing partisan divide over the issue.
"Are we wasting our time here when the governor has already flipped us the bird publicly?" asked Assemblyman Paul Koretz, D-West Hollywood, during testimony by state Finance Director Tom Campbell.
While Campbell said he was willing to negotiate with the Legislature, Koretz said, Schwarzenegger was appearing in Bakersfield and Hayward, slamming lawmakers and saying he was going over their heads to voters.
Campbell said Schwarzenegger remains "committed to the legislative process," and asked Koretz, "Who is helping the process with the 'flipping the bird' comment?"
The hearing produced no vote and represented the Assembly's first foray into an issue quickly becoming a contest of wills between organized labor and its Democratic allies and business groups backed by Republicans. The Senate has already held two hearings in a Capitol where public employees are gearing up major campaigns to defeat the idea.
Initially proposed by Assemblyman Keith Richman, R-Chatsworth, the overhaul plan would require all new public hires after 2007 to contribute to their own retirement through 401(k)-style individual investment accounts used by more than 40 percent of private sector employees.
Tuesday, Republican Schwarzenegger, who proposed the same idea in his January State of the State address, declared an impasse with the Legislature's ruling Democrats and promised to spend $50 million to put the proposal on a special election ballot in the fall and pass it. It would appear alongside his plans to limit state spending, restructure tenure for teachers and change how political districts are drawn.
Change is needed, Richman told the committee Wednesday, because rising public employee pension costs gobble up ever larger shares of city, county and state budgets. That "money that is not going to education, not going to public safety, the sheriff's budget and it's not going into infrastructure."
But Assemblyman Albert Torrico, a Democrat from Fremont and the committee's chairman, said the average state pension is $1,600 a month and under a private plan "if the stock market drops, it's over" for employees.
Bay Area firefighters, two widows of policemen and firefighters killed in the line of duty and Jerry Parsky, chairman of the University of California Board of Regents, also testified against the idea. Parsky, a major financier appointed to the board by Gov. Pete Wilson in 1996, coordinated President Bush's 2004 presidential campaign in California. He told the committee the plan would "put us at a noncompetitive disadvantage for hiring faculty" and noted that UC's pension system, unlike those of the state and many local governments. is fully funded to pay its retirement bills.
Schwarzenegger has called public pensions "another government program out of control" and wants to end the state's contributions to California's $186 billion California Public Employees Retirement System and $126 billion California State Teachers Retirement System. This year, the state is set to pay $3.6 billion for its pension contribution, while it paid $160 million in 1999. The higher costs are due to stock market losses suffered by the pension funds in 2001 and 2002, longer retiree life spans and multibillion dollar hikes in retirement benefits at the market's height in 1999.
Legislative projections show the state's contributions for its employees could rise to $4.6 billion a year by the end of the decade.
Schwarzenegger's "essential" point is "taking the risk of market decline off the taxpayer," Campbell said.
Only three other states, Michigan and West Virginia, plus the District of Columbia, require most of their public employees to use individual investment accounts. Nebraska dumped its requirement in 2003 when studies showed employees were investing too conservatively and received returns 5 percent lower than those earned by professional fund managers.
On the Net:
California Public Employees Retirement System: http://www.calpers.ca.gov
"Nebraska dumped its requirement in 2003 when studies showed employees were investing too conservatively and received returns 5 percent lower than those earned by professional fund managers."
It's their own fault if they don't save enough money. Why should the taxpayers have to pay for not only our own retirement but we have to pay more for the public employee's retirement because they can't discipline themselves to save enough?
That's insane...what about personal responsibility? Go Arny!!!
The problem is benefit levels of select employee groups. He should go after those.
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