Government Spending

Pension Reform Goes Nowhere in California

Jerry Brown has proposed a decent list of reforms. Too bad the unions will never sign on.


Despite some encouraging details in California Gov. Jerry Brown's recently announced pension-reform proposal, there's virtually no chance the state will seriously reform—or even seriously attempt to reform—a system creaking under the weight of about $500 billion in unfunded liabilities.

The proposal isn't bad. It doesn't go far enough to fix the problem even if implemented in its entirety, but it goes further than most pension reform advocates had expected from a Democratic governor who, to date, has governed as an extension of the public-employee unions that elected him to office.

But the plan probably is dead on arrival in the union-dominated Legislature. One might even argue that Brown is being cynical here—offering reasonably tough reform proposals that he knows will go nowhere. Then he can claim that he has tried to fix the problem but could not surmount the insurmountable.

On the budget, Brown has ended up like Arnold Schwarzenegger—kicking the can down the road. But he did pull out the stops for his tax-hike ideas. They are bad ideas, but he tried to get them approved. What are the chances he will try equally as hard on the pension matter given that they seem to go against his nature? As a friend of mine says, the ballpark chances are somewhere around zero.

On taxes, Brown only needed to overcome Republican opposition and win over a few legislators, but he failed. On pensions, he needs to shift the thinking of his entire party, including the two top Democratic leaders who have spent years working in the government employee union movement. As the Sacramento Bee reported, "California's powerful labor interests objected to major parts of the plan, and the leaders of the Democratic-controlled Legislature—neither of whom attended Brown's announcement—reacted warily."

You can't argue with these defenders of the current system. The unions are trying to protect lavish compensation packages for themselves and their members and their legislative allies are supporting their benefactors. "It is difficult to get a man to understand something when his salary depends on his not understanding it," Upton Sinclair once wrote. How is Brown going to promote renewed understanding of the pension debt in the light of this reality?

Regarding specifics, Brown would require public employees, including existing employees, to begin sharing in the cost of their own retirements. Frequently, and especially in the case of public-safety workers, the taxpayer pays the employer and the employee share of the cost. Per Brown, "Given the different levels of employee contributions, the move to a contribution level of at least 50 percent will be phased in at a pace that takes into account current contribution levels, current contracts and the collective bargaining process." The increased contributions often are made up for with salary increases, so it's imperative—for taxpayers, any way—that the one hand doesn't give back what the other hand takes away. I doubt unions will give an inch during the collective-bargaining process, where they tend to exert the most power.

Another key component of the Brown plan is a hybrid system that combines a defined-benefit plan public employees currently enjoy (a guaranteed amount of benefits) with the 401/k-style defined-contribution plan combined with Social Security that's common in the private sector. Unfortunately, Brown would require a study to come up with the specifics and the devil always is in the details.

Brown would increase retirement ages, which is a great idea. Currently, public safety officials can retire at age 50 and they often do so and then begin double-dipping—drawing retirement and a new salary as they continue working. Other government employees can retire as early as 55. As Brown explained, "We have to align retirement ages with actual working years and life expectancy." For most employees, retirement will be pushed out to age 67, which is in line with the retirement ages for those of us in the private sector.

Furthermore, Brown wants reasonable limits on pension-spiking abuses. He would require that pensions are based on the final three years' work rather than on the absurd California-only policy of basing retirement pay on the final year. He would strip pensions from felons– something that his colleagues in the Legislature refused to even consider this year – and require that pensions be based on regular pay rather than on pay and the padded benefits often included in the formula. He would stop the scam called "airtime," in which public employees can buy additional retirement benefits often for pennies on the dollar. He would start to reform the scandal-plagued California Public Employees Retirement System.

He would also ban the practice of granting pension increases retroactively. The courts have allowed boards of supervisors and city councils to grant retirement increases back to the first day of an employee's service, thus granting them an unearned gift of public funds but they will not allow legislatures to reform pensions by going backwards. As always, the rules are rigged on behalf of the unions. The Brown plan would at least start to fix that.

These are all good reforms. But most of these items apply only to new hires, which does virtually nothing for the current pension debt because it doesn't do much about current employees. As the Little Hoover Commission reported, public employees should receive all the pension benefits they've been granted through today and start earning pension benefits at a lower level tomorrow. But the specifics of the plan aren't as important as the politics of the California government.

Will the governor use his political capital on behalf of this proposal? Will Democrats in the Legislature face the pension mess and agree to these reforms? Probably not and definitely no. That leaves, as always, the initiative process. It's time for pension reforms to agree on a serious reform and start collecting signatures. Only a naïve person would put much faith on Brown's plan becoming reality.

Steven Greenhut is editor of

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  1. Ohio is going to prove how hopeless it is tomorrow. Cops and firefighters are just too important to avoid bankruptcy by tinkering with their benefits.

    1. Good time to remind Buckeyes to vote Yes on Issue Two tomorrow.

      1. What the article title should have read:

        #OWS has proposed a decent list of reforms. Too bad the libertarians will never sign on.

        1. …and why it always collapses.

          Thesis #26: Collapse is inevitable.
          by Jason Godesky | 2 January 2006

          1. …who would enjoy an increase in the quality of life.

            Hint: Those at the top of the hierarchy won’t. So sad.

            Thesis #27: Collapse increases quality of life.
            by Jason Godesky | 13 January 2006

            1. …finished.

              Thesis #29: It will be impossible to rebuild civilization.
              by Jason Godesky | 19 January 2006

              1. And good riddance.

                The Final Empire: The Collapse of Civilization and the Seed of the Future
                William H. K?tke

                Or read online for free:

                1. I’d ask you for a hit off that but I’m still at work at an evil corporation.

    2. You can’t do anything to Cops/Firemen. In fact, you may need to give raises and improve define benefit. Don’t even think about making Cop pension Defined Contribution…That’s something u can do to teachers…they don’t have guns.

      Remember, look at Brazil, Colombia, Mexico, etc. These places are great models of what USA will look like.

      The 1% will NEED the COPS to stop the other 45% (the rest are republicans/libertarians and will probably not participate in the coupe)

      1. At least subscription fire departments (and trash collection) exist around the country and can be used as examples that these are not required of government.

    3. Firefighters maybe cops no!

  2. Everything can be solved if they just followed through with that plan to split up the state. In the red part, pension reform would easily pass. In the blue part, taxes would dramatically raise to pay for the pensions.

    Everyone would win.

    1. Hey! Not for me.

  3. Serious question: Does Jerry even bother to pretend to be surprised?

    1. He’s taking America back, starting with California.

    2. Jerry has spent a live pretending.

      1. ….should read life…

  4. It’s going to be really fun watching the California implosion, except that I’ll be here in the middle of it.

    But at least it’ll be entertaining

    1. It’s hard not to believe that California politicians have been relying on a federal bailout. Too bad about that crappy economy and federal government fiscal crisis, huh?

      1. You mean the Feds don’t have enough money to do it? Hmm, that hasn’t bothered them so far. Methinks though that that one would probably be enough to unequivocally put the stake through the Ob/Dems heart in Nov’12. Question is, would they comprehend that? After Obamacare it’s hard to know.

        1. I think it’s probably politically impossible under the current economic situation. I have an austerity plan for California, however.

          1. No, we can’t build a border fence around Sacramento!

            1. That’s not my plan. I’d tell you, but it’s NSFW.

              1. If you tell me it involves LBFMs, I will gladly volunteer my time and talents, such as they are.

                1. LBFM, LOL! It’s been thirty some years and seven thousand some miles since I last heard that one.

              2. I’m NAW…go.

                1. I lied. I don’t have a plan. Kind of like the Cylons.

                  Actually, I do have a plan. Reverse secession.

                  1. I had a plan, well, sort of, I mean I didn’t really explain it all that well and we probably had multiple opportunities to exterminate the humans, but yeah, we had a Plan, it said so before every episode!

                    1. If the Plan was to behave randomly, I guess I can accept that.

                    2. Doing what your random number generator tells you is a plan. Not a good one, but still a plan.

              3. The OWS spammers are back after their morning nap, so don’t worry about finding an audience that is not at work.

      2. But a Federal bailout of California would actually be cheaper then the GM bailout and California is far more important than GM. Otherwise we might have to sell California to Mexico or maybe China would like to buy it.

    2. The Shit-Hawks are coming.…

      1. We’re in the eye of a shiticane!

  5. So Scott Walker attempts to curb public sector union power, liberals go apeshit and call him a fascist.

    Jerry Brown attempts to do the same thing (I imagine he would if he could), liberals don’t even notice.

    1. Yeah, because both went about it exactly the same way.

      Or something.

      1. Scott Walker could because he had the votse in the state senate.

        Jerry Brown can’t because it’s not politically possible.

        But on principle both are the same: public sector unions are a blight upon the state budget. The idiots that protested in Madison are the same morons that trust a fox to guard the henhouse, or in other words, trust public sector leeches to not be greedy and self-interested.

    2. “Jerry Brown attempts to do the same thing (I imagine he would if he could), liberals don’t even notice.”
      Because they know he isn’t serious.

  6. OT:

    In regards to the 2k thread last week…

    It was a 2k thread on an article with an image of Matt Welch looking all of the age of 19 with full on hippy hair holding a 40oz….

    And you guys chose to argue about weather or not Rather was white Indian…

    WTF is wrong with you people?!?!

    1. Hey, arguing the merits and drawbacks of the primitivist lifestyle vs. the corrupted city-[STATE] Israeli-American [EMPIRE] is important stuff.

      1. Libertarians don’t like getting spanked with it, and struggle to get it back.

      2. is important stuff.


        I don’t care how important you think it is. That Welch photo is like finding the complete works of Diogenes in which he describes his discovery of plutonium 2500 years ago.

    2. What do you mean, “You people”?

      1. What do you mean, “You people”?

        Libertarians who frequent Hit and Run…


        ….and black gay Zionist Jews.

    3. The Welch picture looked disturbingly similar in the face to the Gillespie FB post of his son’s new driver’s license picture a while back.

    4. 1000 of those posts were rectal/white indian/urine pretending not to be the same person.

    5. What you should argue is whether a fart in a jar can be enhanced using a colored glass jar versus a clear class jar. When a fart is exposed to sunlight, it degrades. If it is kept in a dark place, there is no problem. But if you don’t have a dark place to store your farts, a colored glass jar can prolong the life of the farts. I have personally been able to use farts that I stored away more than 5 years ago to power my car. Of course those farts were right after I ate 3 gorditas from Taco Bell so they were quite potent to begin with. Your mileage may vary.

  7. Where is Jacob Sullum?!

    Judge blocks graphic images on cigarette packages…..7-12-02-53

  8. And it’s not as if the hens are coming home to roost:
    “”State legislators are afraid even to utter the words ‘pension reform’ for fear of alienating what has become — since passage of the Dills Act in 1978, which endowed state public employees with collective bargaining rights on top of their civil service protections — the single most politically influential constituency in our state: government employees.”…..e_1250.htm

    1. So what you’re saying is…

      the key to a happy and prosperous future, and ample retirement, is to move to Cali and get a pubsec job.

      Thanks for the tip!

    2. Oops.
      Jerry *signed* the Dill Act last go-round.

      1. During the last election Meg Whitman saturated the airwaves in this state emphasizing the fact that Jerry Brown is one of the main reasons why the state pension system is so fubar, and yet no one cared! If anything it backfired on her since she was portrayed as anti-labor.

        There is ZERO hope for this state.

        1. Well, perhaps from the ashes a Phoenix will rise. Getting to the ashed part is going to be unpleasant, however.

      2. “Jerry *signed* the Dill Act last go-round.”
        And now he’s in a pickle.

  9. If only this country had fought a war for oil, and then extracted all the oil it could from the conquered.

    The treasury would be overflowing!

  10. As long as our representatives/liberal democrats run our state the unions win. Just a note to all you liberal supporters. Shortly 40% of the states budget have to be set aside for pensions and salaries for the unions. Then you ask why we have no money? So if they refuse to agree to the changes other states have done we’re in deep trouble. Wake up and send a message loud and clear we need Sacramento to force renegotiations. Every rep has been bought by the unions. Make them do their job and kick them out.

    1. Praise the glorious savior of mankind, the city-State (CIVILIZATION!)

      Momlee|11.7.11 @ 2:41PM|#
      As long as our representatives/liberal democrats run our state the unions win.

  11. How do you think it would go if I, a student in the UC syste, were to write ask a public sector employee union rep if he would be willing to maybe reduce his lavish pension and healthcare benefits if it would mean lowering the cost of tuition for me and other public university students?

    1. Probably “ingrateful something something profane something you don’t get it we’re all on the same side something corporations something” but that’s just a guess.

    2. I hope you don’t have a dog.

  12. Meh. Somehow if all this government spending was done via privatization contracts I guess everyone here would be fine with it…

    Again, if a person decries spending on contractors as much as “employee unions,” police and military as much as welfare and education, Departments of Commerce as much as Departments of Education, then I think they are at least a principled person to discuss things with. Otherwise they are merely Republicans.

    1. I don’t care if it is contractors or direct employees doing what little the government should be doing. But negotiations about how many people the government should employ and how they get compensated should take place entirely within the legislature. Elected representatives get to decide how tax money is spent, not union negotiators and appointed bureaucrats.

      1. That’s silly, the “appointed bureaucrats” answer to the legislators.

        What goverments should do is one question, but administration of the agencies once that question is decided is another one. How many big, national companies set pay policy across the board from company hq allowing no discretion for regional and local managers? It’s not done because it is a terrible administrative policy.

        1. You clearly have not read the article, the bureaucrats do not answer to anyone. If anyone dare take on these lazy shits, then your bongo drum brigade will rise up, and the likes of you will be whining the usual social injustice bullshit.

          1. Yeah, its the bongo drum brigade that calls the shots in this nation.

            Dude, you need to turn off the AM radio once and a while.

            1. Like I said, read the article and then comment, the bureaucrats call the shots, and the bongo drummers, which California has no shortage of, will rally to their masters. And so will people like you, defending useless shits, no matter how much money they have burnt through.

        2. That’s silly, the “appointed bureaucrats” answer to the legislators.

          That’s funny. I’ve walked the halls and met many of these “appointed bureaucrats”. They answer to no one. They are entrusted with power. Period.
          To admit that that trust was misplaced is to admit fault, and as we all know politicians never admit fault.

          It’s not done because it is a terrible administrative policy.

          I see it done all the time, and yes it is terrible policy. It’s one of the reasons I’ve got my eye out for a new employer.

    2. “Meh. Somehow if all this government spending was done via privatization contracts I guess everyone here would be fine with it…”
      And I guess you’re fine with, oh, putting people in concentration camps.
      Hey, if you get to assume, so do I.

    3. police and military as much as welfare and education, Departments of Commerce as much as Departments of Education,

      Well, you can make a principled argument that cops, the military, and the Department of Commerce (theoretically) represent legitimate functions of government, but welfare, education, and Education do not, via straightforward readings of the Constitution and theories of limited government, so we should start cutting with the illegitimate expenditures.

      Me, I favor total elimination of many “functions” (including federal welfare and education and others not appropriate to a night watchman state), and drastic cutting of the rest. Does that make me principled? Or merely Republican?

      1. By that logic you’d have to say cutting the Post Office would be near last on your list…

        1. The Post Office by itself isn’t a problem.

          It’s the unions and management structure that are the problem.

          If they closed an office, chances are high that the manager and supervisor would still keep their paychecks though they had nothing to do.

          That’s not because they carry mail.
          It’s because they’re run by shameless jackasses.

        2. I’d say outsource to UPS. Nothing in the Constitution says you have to run the thing yourself.

          1. In the White Man’s Ghost Dance.

        3. Did you miss the part where I said “drastic cutting of the rest”?

    4. You are ignoring the fact that privatization contracts can be easily changed and awarded to other suppliers. OTOH, state worker pensions are not just negotiated with monolithic unions but are also (to some extent) written into state law and the state constitution, and so are extremely difficult to change.

  13. This article is all lies, I have been told many times that unions increase the wealth of the land and create a large and productive tax paying middle class.

    The $500 billion unfunded liabilities is simply not true, California is a social democracy and is thriving and prospering.

  14. Gentle meat bags,

    I will return in 2012. Till then, bask in the glory of my historic posts. Not to worry. The day when I berp-fart-sneeze the world out of existence approaches. LOL


  15. All Californians can do is vote and ride it out!

    1. I vote. No one I vote for wins. Now what?

      1. I have found that I can accurately predict the outcome of an election by taking the inverse of my ballot.

  16. The Department of Veteran Affairs seems to have a bigger budget than the Department of Education. The fact that we get so much bitching about the latter than the former demonstrates that it’s just a relentlessly pushed partisan meme, not one with even an iota of principle behind it. GOPers hate the DOE because they see it as full of Democrats teaching evolution and sex education, not because it spends dollars. If you put an American flag and some camoflauge on that spending they would be leading the charge to increase spending.

    1. It seems the Department of AGriculture’s budget is larger than the Veterans and Education.

      Now ask yourself, how come you don’t see the same amount of bitching about the Dept. of Ag as the Dept. of Ed from our small government stawlarts on the right?

      1. You see lots of bitching when it comes time for agricultural subsidies, or when shitty new regulation comes down the pike.

        The Department of Education affects anyone who has a kid in government schools.
        That’s a lot more people than are (directly) affected by the other Departments.

        1. You’re grasping. You could just as easily say that since every supermarket is impacted by Ag policy that everyone who shops at one is.

          1. Going to the market is the same as dealing with government school teachers and administrators, entrusted with your child, who must comply with edicts from the federal Department of Education.



            You’re not even pretending to be honest here.

            1. The programs of the Department of Ag significantly impact every grocery store in this nation.

              And, the Fed. Department of Ed has a much more indirect impact on education than you portray.

              You send your kid to a local school that is impacted by federal edicts, and you shop at a local grocery store that is impacted by federal edicts.

              The analogy holds dude.

              1. I didn’t realize you left your kids at the grocery store for hours a day.

                They must really think you’re a screwball.

          2. It’s like you’ve never heard of Cato.


      2. Can you actually point out in the article where they bitch about the education department ?

      3. “Now ask yourself, how come you don’t see the same amount of bitching about the Dept. of Ag as the Dept. of Ed from our small government stawlarts on the right?”
        Yep, that darn Fox News! Always pushing ag support:…..m-subsidy/
        What a dipshit.

      4. What the fuck, man, have you had a stroke or something?

        Are you seriously asserting that nobody here bitches about Ag spending?

        1. small government stawlarts on the right=anybody on H&R?

          Fluff, you’re promotion has coincided with a sharp increase in your sloppiness.

          1. How about you mention a name of someone here supports agriculture subsidies, since you cannot name a single one, what exactly is your point again ???

            1. Do I have to enact my point out with puppets for you?

              My point is the hypocrisy of the right. If they really just wanted smaller government then they would be as loudly condemning the Department of Ag as they do the DOE, but since its really all about the evolution, the sex ed and the unionz the latter is what you hear about from them.

              1. My point is the hypocrisy of the right.

                Well, duh. That’s why I’m a libertarian, not a member of the right.
                The right wants to cut government except they don’t want to cut anything that may affect them or their friends and family, which means they’ll balk at anything specific.

                “Get your government hands off my Medicare!”

                Can’t disagree with you there.

              2. Who is this they, name one single name.

      5. Agriculture is a much better example. I don’t know about anyone else, but I spend a lot more time bitching about the Dept. of Ag. than the DOE.

        1. Would you care to argue that hating on the Dept. of Ag. is nearly as common among the right as hating on the DOE?

          1. FYI – Reason is a libertarian publication.

            If you want commentary from those “among the right” there are other places for you to troll.

            1. You’re funny. Lately I find H&R to be as useful as LGF as to what those on the right think. About half of the regulars are, like yourself, LGFers.

              1. When people don’t fit into your straw man you get pissy and accuse them of being whatever you were arguing against anyway, even when they make it clear that they do not think as you accuse them of thinking.

                You are a truly pathetic soul.

          2. Would you care to argue that hating on the Dept. of Ag. is nearly as common among the right as hating on the DOE?

            The articles complain about the Dept of ag here at Reason more then they do about the DOE….the comment ratios follow the articles.

            1. What is even more funny is that Nick and Matt are both on the record for saying that the clean water and clean air acts were ok.

              MNG do you pay any attention about what is written here at all?

              Cuz it sure would explain many of the stupid things you write.

      6. It doesn’t come up much, but sure, beat the Dept of Ag to death with a stick. I’m down.

        1. It doesn’t come up much,


          Ron writes about shitty farm subsidies on at least a monthly basis.

          Also you don’t remember the countless Mangu articles about raids on dairy farmers and dairy stores for the sale of unprocessed milk?

    2. As opposed to the Dems who would rather cut neither, right?

      1. I wonder, do you not know what the word “hypocrisy” means or did you miss the point of what I was saying?

        I guess no reason it can’t be both!

        1. “I wonder, do you not know what the word “hypocrisy” means”
          Are you kidding?! You’re the case study.

        2. If one is a libertarian who wants to cut both and her choice is someone who would cut one or someone who would cut none which one should the libertarian choose?

    3. Are you crazy?

      I hate public education, but we managed to have an awful lot of it before we had a federal Department of Education.

      In fact, education return per dollar spent has dropped since we created a federal department to “help out”.

      Veterans Affairs spending is, to me, Department of Defense spending under another administrative heading. If you wanted to dissolve that department and fold its functions back into the services you wouldn’t hear a peep out of me.

    4. You really don’t see the essential difference between the DOE and VA? Come on. I’m pretty anti-military and even I can see that defense/military stuff is more of an essential government function than a federal dept. of education. DO you really think that given the necessity to significantly cut the size of government, all agencies of the government are equal and should be treated equally and to claim otherwise proves partisan dishonesty? Really?

      This partisanship gotcha game is getting silly.

      1. I see absolutely no reason why promoting the education of the national populace should not be at least as important as promoting a military. Of course, since we spend much more on the latter than the former I don’t even need to make that point, I can simply point to the most bloated departments when talk of cutting comes around and wonder why they are “common sense exceptions” to many cost cutters.

        1. States and local governments spend an outsized portion of their total expenditures on education.

          To most people (not me, but most people) the problem with a federal department of education is that we were doing just fine with education being a state and local prerogative. No one – not one person – employed by the federal DOE actually performs any education function, in the sense of direct delivery of services. So why have it?

        2. I see absolutely no reason why promoting the education of the national populace should not be at least as important as promoting a military.

          And I see absolutely no reason why the feds should be involved in education at all.

          Aside from the Constitutional objections, there’s the practical one (you’re a utilitarian, right) that the money spent at the federal level seems to be completely wasted.

          1. Seems to be? And I thought you Samizdata types were hardcore.

        3. “I see absolutely no reason why promoting the education of the national populace should not be at least as important as promoting a military.”

          The existential dangers of a memetically engineered monoculture are reason enough to apply the precautionary principle; the actual failures of the system are just icing on the cake.


    By Celestia, we need a regime change! Please provide assistance! Aerial assaults! Covert ninja squads! Tactical strikes! Strongly worded letters from the UN! Anything!

    The last sane people in California who can’t leave for one reason or another.

  18. This is one reason I have a problem with transforming federal programs into “block grants” for states.

    The first use of any and all funds sent to states will be to protect the bureaucracy’s salaries and perks.

    We should actually be doing the reverse – stopping the practice of transferring federal funds to states for administration of federal programs. Suck all that money back, and then transfer it directly to individuals without bureaucratic intervention (assuming we keep such programs at all, standard libertarian disclaimer and all that).

    1. I hears ya, Supe.

      Allowing any level of government to spend money that it hasn’t had to personally tax out of the voters is a recipe for waste and abuse. What little accountability there is in our decayed democracy is totally absent.

  19. BTW –

    What’s up with Herman Cain molesting chicks?

    1. Find one that he’s molested, and ask her.

      1. Women don’t lie about rape or sexual harrassment. Unless it involves Bill Clinton.

  20. We need to repeal SB400. When they passed SB400 I didn’t hear any employees complain that they were getting more than they were promised. No they took the extra cash. So we can just as well go the other way. Just repeal it. Go back to the old pension formula. It’s not a violation of contract.

  21. One of the most egregious abuses was San Francisco’s police chief, Heather Fong, who retired at age 53 with a very generous $277,656 pension. She was able to manipulate the system by cashing in unused sick days at the end of her retirement to greatly inflate the amount she was eligible for. A list of some of the city’s other top pensioneers is here:…..ension.php

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