One aspect of the Democrats’ most recent budget proposal that hasn’t gotten much attention is that they seem to be on the exact same page as Governor Schwarzenegger and Republicans when it comes to pension reform. Look at what Kevin Yamamura wrote yesterday on the Sacramento Bee’s website:
“ … in order to make their new budget balance, Democrats are counting on $822 million in savings that depend upon 15 bargaining units negotiating the same type of tentative agreements that six other units have reached with Gov. Arnold Schwarzenegger’s administration. The savings is located on page 9 of Assembly Speaker John A. Perez’s budget outline.
“If that were to occur, the remaining 15 bargaining units would agree to increase employee contributions to pensions and take one unpaid leave day each month.”
Kevin is about the only reporter who has picked up on this, but it is very significant. For months, the Governor and Republicans have been calling for pension reform and negotiating with state unions, but major unions like SEIU and CCPOA have refused to budge (see what I wrote on this in June).
Now that even Perez and Steinberg are assuming the reforms, someone should ask the bosses at SEIU and CCPOA if they’re ready to do what’s right for their members and agree to some modest pension rollbacks.
Although, frankly, if we are really going to look out for the long term interests of both state workers and taxpayers, the discussion really needs to be about phasing out the antiquated model of defined benefits and move to 401k-style defined contribution plans to mirror the private sector. This guarantees a pay-as-you-work benefit to employees (who right now have to be wondering how their pensions will be paid for) and moves responsibility for managing retirement funds away from the government and over to individual employees.