NCPA - National Center for Policy Analysis

California Pension Reform Effort Loses Support

August 19, 2010

Assembly Bill 1987 had been touted as an end to the pension boosting that occurs when public employees add unused vacation, sick time and other benefits to their final year's compensation in order to drive up pensions.  As debate over public pensions flares in the wake of reports of inflated salaries and pensions in scandal-plagued Bell, Calif., reform advocates say that union-backed amendments to the bill have neutered its beneficial effects. 

According to the Los Angeles Times: 

  • Pensions are set with a formula that takes into account age, years of service and final year's pay.
  • Police and firefighters, for instance, earn 3 percent of pay for every year worked.
  • So an officer with a 25-year career would be entitled to 75 percent of his or her pay for life. 

However: 

  • Many municipalities allow retirees to tack extra pay categories on to their final-year salary, pushing their pensions higher, and abuses have cropped up throughout the state.
  • In Contra Costa County, for instance, a retired fire chief earning $223,000 a year was able to draw a $284,000 pension by tacking leave benefits on to his final year's pay. 

An official in Gov. Arnold Schwarzenegger's office said the governor would not sign the amended legislation.   As written, it fails to truly address the problem of pension spiking, said spokeswoman Andrea McCarthy.  Schwarzenegger is calling for major reforms to address $500 billion in unfunded pension debt in California, including lower benefits for new employees and increased contributions for employees, says The Times. 

Source: Catherine Saillant, "California pension reform effort loses support," Los Angeles Times, August 18, 2010. 

 

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