ShareThisWhen the Peace Officers Research Association of California began airing advertisements last week about the difficulty and danger of being a cop, it was more than routine image polishing.
As California's economy continues to decline, as the ranks of the unemployed continue to swell and as private employers trim salaries and fringe benefits, public worker unions are becoming worried about a backlash that would hit their retirement plans.
Gov. Arnold Schwarzenegger is renewing his call for public pension reform and received an unintentional but major boost recently from Ron Seeling, the chief actuary for the California Public Employees' Retirement System.
Seeling told a Sacramento seminar, "I don't want to sugarcoat anything. We are facing decades without significant turnarounds in assets, decades of -- what I, in my personal words, nobody else's -- unsustainable pension costs of between 25 percent of pay for a miscellaneous plan and 40 to 50 percent of pay for a safety plan (police and firefighters) ... unsustainable pension costs. We've got to find some other solutions."
Seeling didn't know that an Internet blogger, veteran reporter Ed Mendel, was in the audience and would quote him. And as Seeling's comments have echoed, they have undercut the official CalPERS stance that no major systemic changes are needed.
CalPERS' portfolio has lost about a quarter of its value in recent years and it will seek a multi-billion-dollar increase in payments from taxpayers to bolster its bottom line. It's been peddling a "smoothing" plan to spread out the payments over a longer period, but Schwarzenegger has said he's not interested, perhaps hoping that the shock would help him sell reform.
If, as Seeling said, public pension costs are becoming "unsustainable," as much as 50 percent of salary for police, fire and other public safety employees, what's the alternative? It's a well-established principle of California law that public worker pensions cannot be abrogated for those already on the payroll. They have roughly the same legal status as bond issues in claiming portions of the public treasury.
Nearly two decades ago, when the state was mired in recession, Republican Gov. Pete Wilson persuaded the Legislature to adopt a two-tier retirement system under which newly hired state workers would receive lower benefits when they retired. A few years later, with Democrat Gray Davis in the governorship, the two-tier plan was scrapped and state pension benefits were boosted sharply on an assurance from CalPERS that they would not spark any increase in state payments.
That turned out to be grossly untrue, but returning to a two-tier system, or perhaps freezing current benefits and shifting to a 401K-type supplement, may be the only reform options. And those changes would do almost nothing to reduce the burden on taxpayers for decades.
It's another fine mess born of making expedient political decisions without considering their long-term consequences.
(E-mail Dan Walters at dwalters(at)sacbee.com. Back columns, www.sacbee.com/walters. Distributed by Scripps Howard News Service, www.scrippsnews.com.)
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