Bill Raden, Capital and Main
When Democratic former San Jose mayor Chuck Reed and Republican ex-San Diego councilmember Carl DeMaio finally unveiled the language for a promised attempt at getting a statewide public pension cutting measure to 2016 voters, the expectation was that Reed II would be a reined-in and more realistically-framed version of Reed I – last year’s failed attempt at undermining the public pension system.
These pension critics in California have targeted public pensions as a place to claim a crisis and to demand pensions changes- which would make them billions.
In 2014 California pensions had 84 % of the funds they need to pay their obligations. Most pension critics- such as the Peterson Institute- say that 80% of potential obligations should be covered in assets.
This argument incorrectly assumes that there will not be more workers paying into the ongoing pensions. That is the policy direction argued for by austerity advocates mostly in the Republican Party.
The truth is that working people such as teachers and police officers paid into these pension funds. At times- the state and local governments skipped their obligations to match the workers contributions. This created a problem that is being dealt with.
That try for the 2014 ballot was aborted after Attorney General Kamala Harris slapped it with a candid, albeit politically untenable summary that frankly described the proposed constitutional amendment as targeting longstanding legal rights—rights that protect the pensions and retirement health care of the 1.64 million Californians enrolled in the state’s public pension systems.
But even veterans of the state’s public-sector retirement wars were unprepared for the sheer scale of what awaited them this time around. Amid the deceptively simple wording contained in the laudable-sounding “Voter Empowerment Act of 2016,” Reed-DeMaio concealed a hidden trigger that is now being recognized as a wholesale attempt to uproot 60 years of statutory law and a critical foundation of labor relations.
Simple Language Conceals Back-Door Attack
While its language won’t shock the public like some notorious headline-grabbing initiatives, it’s exactly the innocuous front that makes the far-reaching Reed-DeMaio a dangerous initiative.
“I’ve looked at a lot of initiatives, and this one’s pretty far out there,” Sacramento labor attorney Lance Olson told Capital & Main. “We’re not talking about killing gay people, but we are talking about some pretty important rights, including those things that were promised to government employees when they started their careers in government.”
At first, people barely noticed. The measure seemed to fulfill pension reformers’ dream of dumping at least the state’s future workforce into 401(k)-styled plans.
Reed’s conservative supporters immediately praised the “bipartisanship” of the measure. They also lauded “the simplicity of approach.” Like earlier attempts at rolling back pensions, it proposes rewriting California’s Constitution to eliminate defined benefit pensions for new public-sector hires. It then politically seals the deal by requiring local voter approval on any new benefit plans. Labor groups blasted the measure as yet another doomed attempt to eliminate the retirement security of the state’s public workforce.
The earliest glimmering that Reed-DeMaio might be far more deeply radical than it seemed came a mere day after its official launch. Writing in the June 5 San Diego Union-Tribune, conservative columnist and Reed ally Steve Greenhut made the extraordinary claim that “The initiative takes aim at the ‘California Rule,’ but in a backdoor way.”
The 60-year-old California rule established that the retirement plan in effect at the time of a public employee’s hire can’t be changed unilaterally—it is in essence part of a contract made at the moment of hire. That puts the “deferred compensation” of pension benefits under the ironclad umbrella of the California Constitution’s Contract Clause as a primary vested right, and also makes future pension benefits earned at the job a collateral right.