Curtain Lifted on Pension Initiative

Prior posts have alerted readers of this blog to a forthcoming public pension initiative.  The group that has been working on the initiative seems to have money for a campaign.  It takes $1-$2 million for signature gathering firms to get an initiative on the ballot.  If an initiative is controversial, it may take loads more money for TV advertising to mount a campaign.

The initiative explicitly covers UC.  It has some ambiguous elements which we hope to unscramble.  Government employers are given the power to modify pensions and retiree health plans going forward for incumbent employees.  Note that the 2010 Regents changes to the UC pension involved only new hires who were put in a second tier.  If a group is covered by collective bargaining and the union and management don’t agree on a change in a limited period, the employer is empowered to make the changes unilaterally.

The authority to make changes seems linked to a finding of significant underfunding.  There is language about less than 80% funding being the criterion.  Note that the UC pension is currently below 80%.  Where there is less than 80% funding, a plan is supposed to be drawn up that remedies the problem in 15 years.  Note that the UC plan involves 30 years.  Note further that in the UC case, and in many cases, retiree health care is not pre-funded at all.

So the issue is whether a government employer must take action or can take action.  If “must” is what is intended, the Regents would have to do something about their current pension solution.  And presumably they would have to set up a pre-funding plan for retiree health that gets to full funding in 15 years.

If it isn’t required that a government employer establish such policies, then presumably the Regents could leave things as they are, i.e., not exercise their authority.  When these issues are clearer, we will report on the situation.

Note that sometimes groups that file initiatives file clarifications or new versions before deciding what to circulate.  You can be sure that if this initiative gets on the ballot, there will be a major campaign against it.  The 2014 ballot will have other initiatives on it. There will be an initiative battle between doctors and trial lawyers, for example.  So there will be competition for public attention. 

Below are some excerpts from the initiative.  You can find the full initiative at:
https://oag.ca.gov/system/files/initiatives/pdfs/13-0026%20%2813-0026%20%28Pension%20Reform%29%29.pdf  If you go to that address and get a blank page, try downloading the file and then reading it from the downloaded version.  Yours truly had to go that route.

Excerpts: