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How Gavin Newsom might handle the public pension crisis
An article by Wes Venteicher in the Sacramento Bee today offers some encouragement as to how Gavin Newsom might handle the public pension crisis, but his previous statements don't support that rosy outlook.
CLICK HERE to read the article
Immediately below is a portion of a Dan Borenstein column from last week that also 'hints' at a change from his previous stance of fully supporting the California Rule. It is further mentioned in the Sacramento Bee article.
The
State Supreme Court decision, due at anytime, will either give Gov.
Newsom a "way out" of having to go against the unions or, hopefully,
offer California government agencies new tools to deal with the growing
unfunded pension liabilities.
It will be interesting to see how Gov. Newsom reacts to either outcome.
According to the January 22nd article by Dan Borenstein,
The high court has said that, unlike in the private sector, once public employees start work, the rate and the terms under which they accrue pension benefits cannot be reduced.
Under the so-called California Rule, benefits workers have already earned could not be reduced – which is only fair – and the rate at which workers earn benefits for future labor is also locked in – which is misguided. We don’t predetermine salary, but we do predetermine pension accrual rates.
The reality is that these benefits are generally too expensive for state and local government to afford. As the state’s watchdog Little Hoover Commission said in a prescient 2011 report, the problem cannot be substantially eased without reducing future benefit accrual rates for current employees.
Brown was challenging the rigidity of the California Rule when his term ended. The first of a string of cases was argued in December and a state Supreme Court ruling is expected soon.
Newsom, during that April editorial board interview, disagreed with Brown and declared his support for the California Rule. However, when I asked him about it this month, Newsom said he was evaluating his legal position.
Where he lands on that will determine whether he wants to truly tame the state’s retirement costs or fiddle on the margins. [Emphasis added]