Click photo to enlarge
Dave Low, chairman of Californians for Retirement Security, accompanied by other representatives of various public employee unions, discusses his opposition to Gov. Jerry Brown's reform plan for California's public pension system at a news conference in Sacramento, Calif., Tuesday, Aug. 28, 2012. Brown's plan, which he says will save taxpayers billions of dollars, includes a cap on annual pension payments, a requirement that new employees contribute at least half their pension costs and increase the retirement age for public safety and non-safety employees. Low said union groups have had no input in Brown's plan, saying that "We've been called into meetings to be briefed on this, but there have been no negotiations with the governor or the Legislature."(AP Photo/Rich Pedroncelli)

SACRAMENTO -- Some of the big-ticket features of the pension reform unveiled Tuesday by Gov. Jerry Brown may not live up to their billing -- at least not for a long time.

Take the much-ballyhooed cap on pensions for new public employees who make more than $132,120. Less than 2 percent of the state's quarter-million employees make that much, so savings from the cap for future six-figure earners would be almost negligible, according to a computer analysis by this newspaper.

That could be a problem politically for Brown, who is tying the success of his November tax-hike initiative to the perception that Democrats got rid of the state's pension headache.

"Will this show on the bottom line right now? No," said pension expert Chris Burdick, a Marin County attorney.

Indeed, a day after Brown and top Democrats in the Legislature announced the deal they say will rein in the state's runaway pension costs, many of its implications were still unclear as the Legislature barreled toward a midnight Friday deadline to pass a pension reform package.

Under the proposal, pensions would be capped for government workers at two salary levels: those who earn more than $132,120 a year, and a much larger group that takes home more than $110,100 individually but also participates in Social Security.


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According to salary data obtained by this newspaper from the State Controller's Office, only 1.6 percent of 246,297 state workers exceeded $132,120 in base pay last year; only 3.7 percent exceeded $110,100.

The numbers are higher among local government employees, at least in the Bay Area: About 5 percent of the 214,541 public employees in the newspaper database make more than $110,100 in base pay.

But none of those workers would be affected by the caps -- only those hired after Jan. 1 would be.

A preliminary analysis of the pension plan by CalPERS, one of the state's two big pension funds, echoed the estimate of legislators, who say it will save $40 billion to $60 billion over 30 years. The state's pension systems are estimated to be about $250 billion short to cover future benefit costs.

Critics argue the state could have saved billions of dollars more if lawmakers had modeled the reforms on those instituted by the federal government in the 1980s -- something Brown had suggested in his original pension reform plan released in October.

The federal government in 1986 established a retirement system for civilian U.S. government workers. Employees covered under the old plan did not participate in Social Security, and their pensions were considered more generous and costly.

The new plan divided the retirement benefit between Social Security, a 401(k)-type savings plan and a smaller defined-benefit traditional pension. The current plan is considered solvent and a model of "hybrid" pension reform.

So why didn't the state give it a try?

Senate President Pro Tempore Darrell Steinberg's office said there were "problems" with implementing such a plan for California and proposed the "pensionable" pay cap as an alternative.

"I was disappointed," said accountant Marcia Fritz, a Democrat who is president of the California Foundation for Fiscal Responsibility. "I don't know why they said it was too hard to implement."

CalPERS spokeswoman Amy Norris didn't dispute that a relatively small percentage of public workers have salaries exceeding the proposed "pensionable" pay cap.

"Most people aren't going to make that much money," Norris said. "I can't give you an exact percentage, but it's going to be small."

Fritz said the pensionable pay cap will bite deeper into local government pensions.

Pension abuse is more widespread at the local level, Fritz said. That's why "you see cities going bankrupt" paying for pensions they can't afford.

Under the new proposal, current state workers will eventually be required to pay half of their pension contributions, whereas now they often pay little. But a large swath of public employees -- those who work for local governments -- would have an additional five years before they'd be asked to contribute that much. And even then, they may not. There's nothing in the new proposal that requires them to do so.

The biggest barrier to finding the kind of savings to make pensions solvent for the long term, critics say, is the legal one: The courts have frowned upon attempts at taking away collectively bargained pension benefits.

Nothing short of a constitutional amendment -- or a major turnabout by the state's Supreme Court -- would allow reformers to get their hands on the "defined" benefits promised current employees.

"Public employees' benefits are vested, immutable and unchangeable," said Burdick, the pension expert.

"Unless the California Supreme Court is prepared to change 100 years of absolutely unchanging, straight-line case law, the Legislature really had no choice."

Contact Steven Harmon at 916-441-2101. Follow him at Twitter.com/ssharmon. Read the Political Blotter at IBAbuzz.com/politics.