California lawmakers cut pension benefits for public employees

Senate Pension reform

Julie Small/KPCC

The California Senate, as they debated pension reforms.

The California Legislature voted Friday to cut pension benefits for public employees who work for the state and in many local governments.

The Assembly passed the measure after an hour of debate, but Governor Jerry Brown had to do some last minute arm-twisting to get enough Senate votes for his package.

Emerging from a series of one-on-one meetings with senators, Brown insisted his reforms will go a long way to cut down pension costs.

"We don’t sent send a rocketship to Mars here in Sacramento, we take reasonable steps," he said. "But this is one of the biggest steps that I’ve ever seen taken with so many contentious parties and opposition."

The new rules — which apply mostly to future hires — raise retirement ages and reduce payouts. They also prevent some pension abuses, such as retroactive pension increases, and “spiking” — a practice in which employees try to bump their final year’s pay to increase their payout.

Many republicans called the plan just a tiny step. They criticized the bill or failing to address the multi-billion dollar gap between what’s already owed to retirees and the money to pay them — what's called the "unfunded liability".

Senator Mimi Walters (R-OC) said the bill won’t help government reduce its exposure to the increasing cost of retirees’ medical benefits.

"This bill does not address retiree healthcare costs, which we know is a ticking time bomb," Walters said.

Democrats had another set of criticisms: they worried the provision of the bill that requires current employees to pay half of the costs of their retirement steps on collective bargaining rights. Senator Noreen Evans (D-Santa Rosa) said the increased contribution also hurts workers’ pocket-books.

"It will end up being an enormous cut in take home pay for public employees and that is no small matter," she said.

Evans says the smaller pay and benefits could mean it will be harder to attract people to take public service jobs.

For all the disagreement about whether pension reform was a leap, a step or a hop, only a handful of lawmakers voted against it.

The rest — nearly 90 percent — said yes to saving state and local governments up to $70 billion in pension costs over the next 30 years.

The governor has 30 days to sign the bill into law.

This story has been updated with additional information and quotes from senators.

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