The Blog

San Jose Mayor Carries Out Threat – Files Promised “Pension Reform” Initiative

As San Jose Mayor Chuck Reed promised last week during a presentation to the conservative Hoover Institution think-tank, he and some of his fellow mayors have filed a new “pension reform” measure that threatens to undermine the promise made to firefighters, teachers, police officers, school bus drivers and other public employees by allowing their retirement benefits to be slashed in mid-career.

Mayor Reed and the mayors of San Bernardino, Santa Ana, Anaheim and Pacific Grove say they are aiming to put on the November 2014 ballot a measure that would allow reductions in the pension benefits that current employees would otherwise earn during the balance of their working lives.

The mayors claim the “Pension Reform Act of 2014” would give cities the flexibility to solve pension problems, but politicians, not public workers, have created the fiscal problems in several communities.  These elected officials, and not the average California public pensioner who receives just $26,000 annually, should be held responsible.

The efforts to blame public employees for fiscal difficulties in a few municipalities echo attempts by the Schwarzenegger administration in 2005 and other pension “reformers” in 2012 to break the promises to public workers under the guise of fixing local fiscal problems.

Californians for a Secure Retirement (CRS) warns the public not to be fooled by the politicians’ assertions about the language in the ballot measure.  The proposed ballot measure would reduce the benefits of current employees and future employees.

“Unlike more than 400 other jurisdictions in the state that have addressed their pension challenges, these politicians would rather wage an expensive political fight funded by special interests, a fight that will result in less retirement security for millions of Californians,” notes the CRS.

The measure would cost taxpayers millions of dollars in expensive lawsuits at a time when the state Supreme Court has already ruled it illegal to cut promised retirement benefits.

There are many policy and legal issues that will need to be researched to realize the full scope of the initiative, but one particular section will have a significant impact on CalSTRS.

If a pension system has a shortfall, a specified “stabilization plan” will be triggered that has unrealistic actuarial goals. That action would leave most pension systems without the ability to plan for solvency without massive costs for employees and employers. 

The intent is clear: mandate unrealistic costs that will leave no alternative but to eliminate the pension plan. Read our Key Points on retirement security.

To be crystal clear, these “reformers” do not want to reform California’s pension plans. Their goal is the elimination of public pensions. 

To view the initiative and the letter submitted to the Attorney General click on: Reed's Pension Initiative Information.

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