Cali Insolvent

Pension reform


It's difficult to pin down an exact dollar amount for how debt-ridden California's public employee pension system is, but calculations under new accounting rules from mid-2015 put that number at more than $600 billion.

Most attempts to reform the system have failed, thanks to California's constitution, which makes it virtually impossible to scale back benefits once they've been extended to public employees. Unions have aggressively fought any municipal efforts to move away from the existing pension system, even when voters pass local ballot initiatives that would do so.

Two reformers—Carl DeMaio, a former San Diego council member who has done work for Reason Foundation, the nonprofit that publishes reason, and Chuck Reed, a former San Jose mayor—put together a bipartisan effort to craft a pair of ballot initiatives to change the state's constitution, giving voters more control. The initiatives would require local voters to approve adding new hires to pension programs, would allow them to vote to prohibit a city from paying more than half of an employee's retirement and health benefits, and would cap municipal contribution responsibilities.

Those initiatives were supposed to appear on what will likely be a very full November ballot. But in January, Reed and DeMaio announced they were yanking the measures and would try again in 2018. Reed told The Sacramento Bee that donors wanted to wait to fight a battle he predicted will cost about $25 million.