After a year of lip-service, Gov. Jerry Brown demonstrated last week that he isn't serious about controlling the rapidly escalating costs of public-employee pensions.
The pathetic "reform plan" he unveiled Thursday is really a thread-bare series of tweaks -- some that will make minor improvements, but none that will substantively shore up the financial instability of state and local retirement plans that are pushing hundreds of billions of debt onto our children and grandchildren, and siphoning ever-increasing sums from vital public services.
Brown talked about pension reform during the gubernatorial campaign last year, but his superficial understanding at the time raised concerns about whether he would be willing to stand up to the public-employee unions that supported him and make meaningful change.
Once in office, he said pension reform would have to wait until budget negotiations were completed, but Republican legislators rightly insisted the issue be included in the bargaining. Now that talks have broken down and Brown has gone public with his proposals, it's clear he doesn't have a substantive solution.
His 12-point plan, released Thursday, had no specifics for five of the ideas. The plan shows that he continues, as he did during the campaign, to regard the state pension crisis as a problem that can be fixed by fiddling on the margins: Just end pension spiking for new employees, require workers to contribute a bit more and hope for a bit of luck from some healthy investment returns.
It's fantasy. It shows a fundamental misunderstanding of the depth and core causes of the problem. In reality, the current benefit levels are unaffordable, and the financing of the system depends far too heavily on unreasonable prayers about investment returns. The market downturn exacerbated the problem, but it wasn't the root cause. Consequently, trying to solve the problem by banking on a soaring stock market is simply irresponsible.
As the watchdog state Little Hoover Commission clearly stated in its comprehensive pension report in February, the problem cannot be substantially eased without reducing future benefit accruals for current employees. Yet, Brown's plans does not consider that. As a result, the math simply won't pencil out. We will continue digging ourselves deeper into debt.
Instead, Brown would end spiking practices by basing pensions only on base pay, eliminating the addition of unused vacation or sick leave to boost calculations, and requiring use of an average of the final three years' salary rather than the currently common final-year method. Good ideas, but he would apply them only to new employees, meaning the benefits would not be seen for generations.
He would require all workers to pay their full annual share of their pension costs. Currently, many governments pick up the employee portion, leaving workers with a free ride. This is perhaps the best idea on Brown's list, but, unless public agencies are required to put their savings toward paying down the debt, this would not ease the mounting debt.
He would bar contribution "holidays," an irresponsible practice seen during the heyday of the stock market in which employers and employees were excused from payments to their pension systems. And Brown would bar future pension increases from applying retroactively. Both good ideas, but, let's face it, no one will be talking about payment holidays for decades, and only the most irresponsible officials are considering pension increases.
In sum, there are some good ideas in here, but they don't fix the problem. After all this time, Brown should be embarrassed to issue such a thin proposal. It makes one wonder where he's been all this time.
Daniel Borenstein is a staff columnist and editorial writer. Reach him at 925-943-8248 or email@example.com.