Gov. Jerry Brown laid out a detailed plan to alter California's state and local public retirement systems on Thursday – and immediately drew fire from his core labor constituency.
The details delivered to the Legislature on Thursday generally tracked with an outline he unveiled in October. Representatives of a union coalition hoped to negotiate what they consider a less severe package. On Thursday, they said they felt blindsided.
"To launch this bomb in the early stages of the legislative season can only be counterproductive," said Steve Maviglio, spokesman for the union coalition Californians for Retirement Security. "The timing and severity of this was quite a surprise."
Because the package of proposals amends the state constitution, it needs support from two-thirds of lawmakers in the Democrat-controlled Senate and Assembly to be put on the Nov. 6 ballot.
The centerpiece of Brown's plan ends traditional pensions for state and local government employees hired July 1, 2013, and later. Employers would be offered "hybrid" plans that combine a smaller guaranteed payout with a more volatile 401(k)-type component.
"I think there's a lot of really good stuff in the proposal," said retired state Finance Director Mike Genest, who is now aligned with California Pension Reform, a group that is raising money for its own ballot measure.
While the unions and some experts have warned that hybrid pensions would devastate retiree security, Genest said that the idea is fair because "at least some of the risk is shared with the employee."
Brown's plan aims to replace 75 percent of an employee's income assuming 30 years of service and a retirement age of 57 for public safety employees. Other workers would reach full retirement at 67 after serving 35 years.
The governor also wants to reshape the board of the California Public Employees' Retirement System, which currently includes six seats elected by fund members and five filled by elected officials or appointed by the governor.
Brown would dump the State Personnel Board appointee and the insurance industry representative. Then he would adds seats for the state Finance Department director, a health insurance expert, a representative from a government agency that contracts with CalPERS and two "independent" public representatives without CalPERS ties – all appointed by the governor.
The Assembly speaker and the Senate Rules Committee would jointly appoint one member, bringing the total number of board seats to 15.
Brown has said pension funds lack independence and financial savvy.
Other provisions include requiring that government workers pay at least half their pension costs, stripping pensions from felons whose crimes are job-related, ending additional service credit purchases, banning employers and employees from skipping contributions and basing benefits on a three-year average of workers' pay.
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