Category: health care

Don’t Panic

Some readers of yesterday’s New York Times who read the article about municipalities reneging on pensions may panic, particularly those readers close to retirement. There is a temptation to go for the lump-sum cashout in a panic, i.e., get the money while the getting is good.

Before you do, however, it is important to note that states such as California and state agencies such as UC, do not have a legal means to declare bankruptcy. There is no legal way out of their pension obligations.

Using the lump-sum option will eliminate your access to retiree health care. It is true that retiree health care is not guaranteed indefinitely. But it is worth a lot, even if (as planned) retiree contributions rise. Were the Regents to drop retiree health, they would be encouraging folks to take the lump-sum cashout, a step which which would not be desirable in terms of dealing with the Regents’ pension management responsibilities.

So yours truly advices you not to panic.

The NY Times article is at http://www.nytimes.com/2011/08/13/us/13bankruptcy.html

Maintaining a Healthy Balance

UC has maintained a kind of cautionary balance for its health plans meant to smooth out sudden bumps in health care premiums. Since the state budget has squeezed the UC budget – including using UC as a loan department – the Regents approved various actions at their July meeting to try and deal with the cash crunch. Among these was tapping the health reserve.

As the letter below (a public document I have been assured) indicates, the systemwide University Committee on Faculty Welfare has expressed concern about completely depleting the fund.

Apparently, that is not the intention at this time, but the Regents action would allow it. Were the fund completely depleted, upward bumps in premiums would immediately have to be covered, potentially raising participant contributions suddenly and without the possibility of smoothing.

Below is the text of the letter:

July 25, 2011

NATHAN BROSTROM, EXECUTIVE VICE PRESIDENT BUSINESS OPERATIONS

RE: Regents Plan to Draw Down Health and Welfare Reserves

Dear Nathan,

The University Committee on Faculty Welfare (UCFW) received a presentation at its June 10, 2011,meeting by Provost Pitts and CFO Taylor on the subject “Revenue Bridging Strategies”. As background, a white paper on this subject dated June 2011 was shared with the committee members. One strategy listed was “Draw Down $50 million From Health & Welfare Reserves”. We further note that adoption of Regent Action Item F11 at the July 14, 2011, Regents meeting included an endorsement of the President’s plan to draw down “as needed” (emphasis added) from the University’s employee/retiree health and welfare reserves. The discussion associated with this action mentions that as much as $97 million could be drawn down from this fund source. We are concerned that a complete depletion of the employee/retiree health and welfare reserve may have significant negative impacts on employees and retirees if health care costs experience an unexpected and sudden increase. On July 22, 2011, Provost Pitts reassured members of UCFW’s Task Force on Investment and Retirement (TFIR) that the intent of the Office of the President is not to draw down more than $50 million from this fund source.

We strongly recommend that any action withdrawing more than the originally suggested amount of $50 million first be discussed with UCFW and other Senate committees involved in health and welfare benefits and budget planning. Thank you for your attention to our concern.

Sincerely,

Joel E. Dimsdale, UCFW Chair

Copy: UCFW
Larry Pitts, Provost
Peter Taylor, Chief Financial Officer
Dwaine Duckett, Vice President, Human Resources
Martha Winnacker, Executive Director, Academic Senate

Judge dismisses Livermore lab retirees’ lawsuit against UC: Transfer of retiree health plan deemed legal

Background: A group of retired nuclear lab employees sued UC with regard to their transfer to a less desirable retiree medical plan than currently covers other UC employees. Readers may remember that for decades UC ran the labs as a legacy of the World War II Manhattan Project. When administration of the labs – after various security-related scandals – was transferred to a consortium of private contractors and UC, benefits such as pensions and health care became an issue.

Judge dismisses Livermore lab retirees’ lawsuit: Transfer of retiree health plan deemed legal

By Suzanne Bohan, Contra Costa Times, Updated: 06/08/2011 (excerpt)

A three-year legal battle by Lawrence Livermore Laboratory retirees over medical benefits has sustained a major setback, according to a spokesman for the plaintiffs. In a lawsuit against the regents of the University of California, four lab retirees argued that UC illegally transferred them into the health care plan of the entity that took over lab management from the university in 2007. But on May 27, an Oakland judge dismissed the lawsuit.

Alameda County Superior Court Judge Frank Roesch (ruled that) the plaintiffs didn’t deliver evidence of “a binding contract” guaranteeing them health benefits “equal to those provided to other UC retirees,” the judge wrote. Nor was their assertion of major financial injury upheld. Roesch wrote that the switch from one retiree health plan to another isn’t “an injury so severe” as to require court intervention. Charles Robinson, UC’s vice president and general counsel for legal affairs, stated in an email that UC “is pleased that the judge acknowledged that the university’s transfer of responsibility” for retiree medical benefits “was legal and appropriate.”

Full story at http://www.contracostatimes.com/bay-area-news/ci_18224492

In the short term, this ruling relieves UC of the potential costs of re-assuming the old benefit plan for these employees. But, of course, it also spotlights the shakier obligation of UC retiree health relative to the pension obligation.

Regents Ponder Questions (With the aid of a management consultant)

At the upcoming Regents session scheduled for the Ides of March, the Regents have invited a management consultant to help them ponder questions such as those below:

* How can a more diverse student body be supported during a period of flattening or declining federal/or state appropriation?

* How do we attract target students with the capacity to provide competitive tuition subsidization that is competitive with peer institutions?

* Is the University effectively evaluating alternatives to traditional education practices (e.g. three year degrees, a multi-year tuition schedule) to help address student access and affordability issues?

* How robustly is the institution evaluating its academic programs to determine whether to scale-back or discontinue non-strategic and financially under-performing programs?

* Is student access being effectively messaged in the institution’s development activities?

= = =

* Are there new or additional opportunities to identify non-value added or duplicate tasks that are performed within or between departments and central functions?

* Are there shared service or outsourcing opportunities for administrative tasks?

* Are there cost saving opportunities due to high level of decentralization within the institution and level of spending outside the central procurement function?

* Have we performed robust analytics around preferred vendors to identify potential cost reductions?

* Has technology been appropriately leveraged to gain efficiencies within certain processes, such as pre- and post-award administration?

* Has information technology spending been rationalized across the institution?

* Is there effective monitoring in place to ensure that implemented cost reduction measures do not adversely impact internal controls?

= = =

* What is the impact on operations of a research funding scenario at 2007/2008 levels?

* Do we have the qualified staff in key Research Funding & Administrative positions that not only understand and enforce various requirements, but can also identify new opportunities for funding? How responsive is our Research Funding & Administration group to changing rules, regulations and requirements?

* Are we strategically recruiting faculty who are considered attractive candidates for sponsored award funding?

* Are we taking advantage of collaboration opportunities across disciplines and with other institutions?

* Do we have effective research conflict of interest policies for faculty and the institution?

= = =

* How does the institution address significant post-retirement and healthcare cost increases given recent budgetary reductions that have impacted employee salaries, government funding pressures, and projected revenue and expenses?

* Are post-retirement pension and healthcare liabilities adequately funded?

* What is the plan to fund these liabilities if they are currently underfunded? Are these accurately reflected in the financial statements?

* Are the accounting obligations related to post-retirement and healthcare benefits effectively calculated, scrutinized and periodically monitored?

* What is the Accumulated Post Retirement Medical Benefit Obligation projected to be in ten, fifteen, and twenty years?

* What is the impact of projected post-retirement benefit costs on sponsored research fringe benefit rates?

Full set of slides is available at http://www.universityofcalifornia.edu/regents/regmeet/mar11/a5.pdf

So many questions! Maybe it’s better not to ask:

Livermore Retirees Sue University Over Health Care Benefits

Livermore Retirees Sue University Over Health Care Benefits (excerpt)

Elizabeth Lesly Stevens, NY Times, 1/1/11

As one of the country’s leading nuclear physicists at one of the country’s most prestigious scientific institutions, Jay Davis has worked in the golden hills of Livermore and weapons depots of Iraq. In 1988, Mr. Davis founded the renowned Livermore Lab’s Center for Accelerator Mass Spectrometry, which reveals the chemical makeup of substances and has helped advance research across many disciplines.
…Now, to Mr. Davis’s surprise, his long association with Livermore Lab has brought him to a courthouse in Oakland. There, a State Superior Court judge is considering a lawsuit that Mr. Davis, now 68, and three of his fellow Livermore retirees have brought against the Regents of the University of California.
The retirees, who received U.C. paychecks for decades, say the university unfairly cast them out of its retiree health care system shortly after the federal Department of Energy, which owns the lab, turned management over to a private company in 2007. The new entity, Lawrence Livermore National Security LLC, is comprised of the Bechtel Corporation, the Babcock & Wilcox Company, URS Corporation, Battelle,— and the University of California.
The University of California, as part of the restructuring, shifted the burden of providing health benefits for approximately 5,000 Livermore retirees to the new entity. Counting spouses and other dependents, about 7,500 people were affected by the change.
As state and local governments and public entities like the University of California grapple with the skyrocketing costs of providing pensions and health care benefits to retirees, a movement is afoot nationwide to devise ways to ease that financial burden. At the University of California, retiree obligations, even absent the Livermore retirees, threaten the institution’s long-term financial viability. Its pension fund is underfunded by $21.6 billion. In mid-December, the Regents announced a plan to push back by five years the retirement age for future employees, to 65, and to cut U.C.’s contributions to the cost of retiree health care.
The university also faces threatened legal action from a group of its highest-paid executives. The San Francisco Chronicle reported Wednesday that it had a copy of a letter sent recently to the Regents by 36 senior university executives who are demanding that the university let them accrue pensions based on their entire paycheck instead of capping the eligible salary at $245,000. Such a move would cost the pension fund another $5.5 million a year, in addition to $51 million in retroactive payments the executives demand. The executives claim in the letter that the Regents had earlier agreed to remove the cap, but reneged because of the dire financial condition of the university and its pension fund.
…Mr. Davis and the Livermore retirees say that the health coverage offered by Lawrence Livermore National Security is far inferior to even the diminished plan now offered by the university. They also fear that L.L.N.S. will one day simply cease to cover them.
Their case will test the question of how free an employer is to renounce what were once regarded as “vested” benefits. A retiree’s right to cash payments out of a solvent pension fund is generally unassailable, but other expensive post-employment benefits, like health care, may not be. Private-sector employers have fought these battles for years, and in many cases have wriggled free of these obligations.
…The retirees say they tried to discuss their concerns with the U.C. president, Mark Yudof, and university general counsel, but were rebuffed. Appeals to local elected officials and the Regents went nowhere, they say. Lawrence Livermore National Security is “a business fiction with no real assets,” Mr. Davis said. Information on it is scant. Its spokeswoman did not respond to requests for comment. Its annual report noted 2009 “costs” of $1.5 billion but offered little other financial information. (It did, however, trumpet saving $1.8 million in pension and benefits costs last year.) The University of California declined to comment beyond pointing to legal filings it had already submitted. U.C. argues that the retiree claims have no merit because the retirees cannot produce a university document that states that retiree health benefits were promised “for life.”

Judge Frank Roesch of Alameda County Superior Court ruled Dec. 17 that the retirees had not yet provided sufficient evidence to support their claim that the university had promised retirees health coverage “in perpetuity.” The retirees argue that the university has not made its microfiche records sufficiently available so that they can find a specific document or official pronouncement made between 1952 and 2007 that would substantiate their claim to lifetime coverage. They have until mid-January to present such a record to Judge Roesch. Some of the Livermore retirees’ health care costs have already risen by thousands of dollars a year, they say, while the quality of the coverage has deteriorated…

Newspaper Editorial Unhappy With “Happy Talk” About UC Pension Fix

Yet another reminder that the pension/retirement issue at UC did not end with the December Regents meeting below:

UC president’s happy talk not helpful (excerpt)

San Diego Union-Tribune Editorial

December 20, 2010

Like so many public agencies in the Golden State, the University of California has promised vastly more in retirement benefits for its employees than it can afford. Taxpayers should find the UC system’s woes particularly appalling because of this fact: For two decades, the state and UC employees didn’t put aside any money at all toward future pension costs, leading to a current overall shortfall of $13.4 billion. Earlier this year, UC President Mark Yudof finally began pushing to adequately fund pension costs. But the plan that regents approved last week for nonunionized workers – who make up nearly 60 percent of UC’s employees – is a huge disappointment. It raises the earliest retirement age for new workers hired after July 1, 2013, from 50 to 55 and requires that workers contribute somewhat more toward the cost of their benefits.

Yudof’s declaration that the changes “will go a long way in solving a major long-term challenge to the university’s solvency” is hard to fathom. Significant savings are decades away. A Contra Costa Times analysis indicates the overall shortfall still will soar to $21.9 billion by 2020.

What will happen in the meantime? If retirement benefits are funded in an actuarially sound way, the result is likely to be enormous frustration for both taxpayers and UC students, who are sure to face more tuition hikes.

Yudof’s assertion that these and previous modest changes were necessary to ensure that UC maintains its academic reputation is also questionable. UC’s reputation depends on its faculty – which represents slightly more than one-seventh of its work force.

If UC’s president and its regents really wanted to fix this problem, a bolder approach makes far more sense. First, retirement health benefits should be dropped for all new hires and for any current employee who can qualify for Medicare coverage. Second, just as more generous public safety agency benefits are often decoupled from those of general government workers, benefits for UC faculty should be decoupled from other UC workers, whose retention is simply not as important to UC’s future success…

Full editorial at http://www.signonsandiego.com/news/2010/dec/20/uc-presidents-happy-talk-not-helpful/

UPDATE: The view from calpensions.com http://calpensions.com/2010/12/20/uc-pensions-did-regents-solve-the-problem/

Audio of Regents Meeting of 12-13-10: UCOF Approval & Post-Employment Benefits Plan Approval

Below are links to the audio of the Regents meeting of 12-13-10. There are 13 segments. (A couple of minutes of noise at the beginning of Part 1 have been omitted during which there were problems in linking two locations. The meeting officially began once the link was established.)

At this meeting, the Regents approved the UCOF (University Committee on the Future) report as well as the Yudof plan for post-employment benefits (pension & retiree health care). The Regents meeting took place with a video link to UCLA where some Regents attended.

As the previous post on this blog noted, the Yudof plan document was recently modified to omit certain limits on higher-level pensions. Other than an acknowledgment that there was a modification, there was no discussion of the reasons for the change or what the change entailed.

The public comment period ran about three quarters of an hour which appeared to be less time than the agenda indicated. There were comments on both the UCOF and retirement issues. Union representatives argued for representation in controlling the pension, against a two-tier pension approach, against raising the retirement age to 65 for workers doing physical labor, and for a progressive schedule of recipient payments for retiree health. (Higher income recipients would pay more.) Also in the public comment segment was an appeal for aid for undocumented students.

The Berkeley Faculty Assn. asked both for a faster ramp-up of contributions and against STIP borrowing. It is unclear whether the BFA representatives understood the potential contradiction between those positions or the $2 for $1 problem that is behind the STIP borrowing. (STIP borrowing is intended to speed the ramp-up of funding into the pension plan and – by accelerating the state contribution – to bring in contributions from non-state sources. Roughly $2 out of $3 of contributions comes from non-state sources that can’t be tapped for more than the rate the state/Regents pays.)

A CUCFA representative began a discourse on an economic history of California since the end of World War II which was cut off because of time limits imposed on those who speak during the public comment period. It is not clear what the conclusion to be drawn was.

Following the public comment period, there was some discussion of both UCOF and retirement issues. Then the meeting turned specifically to the UCOF report. There was some confusion among the Regents as to whether approving the report would amount to approving the contingencies for funding listed in the report. (The report listed some more drastic/controversial contingent steps UC might have to take if the state funding crisis continued but did not make formal recommendations.) Two Regents voted against the UCOF report which nonetheless passed. Because there was a yes-or-no vote on the entire report, a Regent who objected to any element had to vote no on the whole package.

On the Yudof plan for retirement benefits, three Regents ultimately voted no: Bonnie Reiss, Eddie Island, and Charlene Zettel. Only Reiss gave a detailed explanation – basically that the lower-tier pension plan was still too generous and out of step with what public pensions of the future will offer. Reiss speaks at the beginning of Part 13.

There was no option included in the plan as approved for incumbent employees to switch to the lower-tier. As prior postings have noted, although there has been discussion of offering such a choice, IRS approval would be needed.

On the retirement age issue, there were several assertions that UC expected the age issue to come up in future collective bargaining negotiations.

Annoying element: Peter Taylor characterized the two-decade contribution holiday as one in which employees did not contribute. In fact, there were no contributions, employee or employer. Had there been contributions, the bulk would have been from the employer.

UPDATE: A report on the meeting in the San Francisco Chronicle is at http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2010/12/13/BANF1GQ0FF.DTL The LA Times version is at http://www.latimes.com/news/local/education/la-me-uc-pension-20101214,0,7451598.story

Regents meeting 12-13-10 (Audios from Facebook)
Part 1

Part 2

Part 3

Part 4

Part 5

Part 6

Part 7

Part 8

Part 9

Part 10

Part 11

Part 12

Part 13 (end)

The New Pension & Retiree Health Care Plan to be Considered by the Regents Now on the Web

The post-employment benefits plan (pension and retiree health care) proposed by President Yudof is now on the Regents’ website for consideration at the December 13 special meeting of the Regents. It is what was previously presented at the November meeting. As previous posts have noted, there will be a two-tier pension plan. It is unclear whether incumbent employees will have the option to switch to the new lower tier. An IRS approval would be needed for that option to be offered.

The proposal is at http://www.universityofcalifornia.edu/regents/regmeet/dec10/j1.pdf

I am not expecting a great deal of controversy among the Regents on this proposal:
[youtube http://www.youtube.com/watch?v=Kj9kcoIbY_M&fs=1&hl=en_US]

New Pension Initiative Could Override Regents’ Action

I have noted in prior posts that UC’s plans for its retirement program could be overridden by a ballot initiative.

A new pension ballot initiative is in the works. In the past, no pension initiative made it on to the state ballot. The closest such an initiative has come was in 2005 as part of the governor’s “Year of Reform” effort. In that case, the initiative was pulled due to a controversy over the impact on survivor benefits of public safety workers.

While it costs only $200 to file an initiative, getting the signatures in practice requires hiring signature gathering firms at a cost of $1-2 million. Whether the group described below has those resources is not known. Beyond getting something on the ballot, it is necessary to fund a campaign for it which can be quite expensive. See below for more on the new initiative.

Group Touts New Pension Initiative

Dec. 1, 2010, calwatchdog, Steven Greenhut

A pension reform organization has released a draft initiative plan for the 2012 ballot that would require public employees to pay half their retirement benefit costs, mandate defined contribution plans for new employees, significantly limit public pension benefits and require public employers to fully fund all pension and retiree medical benefit plans by 2020. The initiative will impose stringent new rules on the governance structure of public pension plans.

Sponsored by Californian Pension Reform, the initiative would apply to all public agencies in the state of California. “The last time we tried to reform pensions, the unions convinced everyone that the benefit changes we sought could best be negotiated at the bargaining table,” explained CPR President Marcia Fritz, the head of a Citrus Heights accounting firm. “We’ve seen a little movement in this direction, but mostly it’s been done to avoid public scrutiny. The unions have offered few changes that would begin to fix a half-trillion-dollar unfunded pension liability problem. In fact, they’ve actively tried to stop even modest pension reform efforts at the local level. So it’s time to take this matter to the state’s voters.”

Here are the details of the proposal, provided to CalWatchdog from CPR:

The Fair and Sensible Public Employee Retirement Plan Reform Act

The people of the State of California find and declare that:

I. It is the intent of the people of California to provide retirement benefits to public employees that are comparable to benefits provided to employees in the private sector at a comparable cost to taxpayers.

II. Public retirement benefit plans have become financially unsustainable, threatening future benefit payments, diverting resources from essential public programs, increasing pressure for higher taxes and burdening future generations with debt from unfunded pension liabilities.

III. Retirement benefits granted to many public employees now exceed the comparable benefits available to most citizens and taxpayers.

The California Constitution is amended to provide that:

1. Public employees pay half their retirement benefit costs.

(a) All public employees shall pay at least one-half of the normal actuarial cost of their retirement plan benefits, including retiree medical benefits.

(b) Effective July 1, 2013, public employers may not contribute an employee’s share of retirement plan benefit costs.

2. Defined contribution plans for new employees.

(a) All public employees hired on or after July 1, 2013 shall be eligible to participate in a competitive defined contribution retirement plan.

(b) Disability benefits for public employees hired on or after July 1, 2013 shall be provided through insurance policies, self-insurance or joint powers authorities and not by pension plans with the exception of accelerated vesting.

(c) Public employers shall provide such employees with competitive life insurance and disability benefits that are integrated with federal, state, pension and insurance benefits otherwise provided.

(d) No public employee hired on or after July 1, 2013 may receive lifetime or formulaic retirement medical benefits prior to age 65.

i. Before each decennial anniversary of the July 1, 2013 transition date, the Legislature shall adjust this age requirement to reflect changes in longevity.

ii. Public employers may provide competitive defined contribution medical benefit plans with matching employee contributions and earlier age eligibility.

(e) Nothing in this amendment shall affect employees’ medical benefits before retirement.

3. Limited public pension benefits.

(a) The defined retirement income benefits for employees hired on or after July 1, 2013 shall not exceed the median statewide household income ($56,344 in 2009).

(b) All benefits from Social Security and California public pension plans shall be integrated for the purpose of determining such employees’ retirement income benefits, not including income from defined contribution plans.

(c) Pension benefits for employees hired after July 1, 2013, shall be based on an average of three or more years of qualifying compensation excluding overtime, accrued sick and vacation pay, bonuses, severance payments, and all other non-recurring compensation.

(d) Incumbent employees may remain in their current retirement plans.

4. Full funding and implementation by 2020.

(a) The Legislature shall enact a mandatory implementation plan before July 1, 2013, to require the full actuarial funding of all public pension and retiree medical benefits plans no later than January 1, 2020 without increasing taxes for this purpose.

i. The implementation plan shall require employee contributions of at least one-half the normal actuarial costs of all such plans in 2020 and thereafter, with substantially equal incremental increases during the implementation period.

ii. The implementation plan shall allow public employees to decline or discontinue participation in any retirement plan and select a lower-cost option, if permitted by federal laws and tax regulations.

(b) Until 2020, public employers contributing less than full actuarial funding shall adopt and publish annually their strategic financial plan to achieve full funding without increasing taxes for this purpose.

(c) The implementation plan shall honor conflicting provisions of employment-related agreements executed prior to the qualification date of this initiative until their earliest possible expiration, extension, renewal or amendment.

(d) Until 2020, no public employer shall be required to increase its plan contributions by more than its incremental revenue growth in any fiscal year.

5. Governance.

(a) After January 1, 2014, at least two-thirds of the members of a public pension plan’s governing trustees shall be independent of that retirement system and its participating employers.

(b) At least two-thirds of independent trustees shall be qualified for service as certified or licensed financial, actuarial, accounting, legal, benefits or investment professionals at the time they are selected.

(c) The Governor shall appoint the independent trustees for statewide retirement systems, and the Legislature shall determine the method of selection for other pension plans.

(d) All trustees shall be held to the highest prevailing standards of fiduciary law.

Definitions. For the purposes of this amendment:

“Actuarial” means the prevailing professional and governmental-standard method of converting accrued and future retirement benefits costs to present values and required funding levels. Whenever professional actuarial practices and generally accepted accounting principles for governments differ, the more fiscally conservative approach shall apply.

“Competitive benefits” do not exceed the level necessary to attract and retain employees in the labor markets from which public employees are recruited. Social Security benefits eligibility shall be considered in such determinations. Benefits which do not exceed comparable and valid local or regional labor market survey averages in the private sector shall be conclusively competitive. Benefits approved by voters shall be presumptively competitive.

“Full actuarial funding” is the complete and timely payment of the normal actuarial cost and the actuarial amortization of unfunded liabilities accrued in a retirement benefits plan over active employees’ remaining service periods.

“Integrated benefits” are reduced by the amounts paid from other sources including lifetime Social Security benefits.

“Normal actuarial cost” is the current service cost to actuarially fund employees’ retirement benefits and excludes the annual amortization of unfunded liabilities. For employees hired on or after the transition date, the discount rate used to determine and fund normal actuarial costs shall be a recent five-year simple average of U.S government bond rates and taxable municipal bond index rates. This discount rate shall also apply to public employees who previously received a retroactive benefits increase of more than 25 percent of their accumulated benefits for prior service of more than five years.

“Pension plan” means a defined-benefit retirement income plan paying lifetime income to public employees.

“Public employee” means a paid provider of services to a public employer eligible for retirement benefits.

“Public employer” means the state, a municipality, school district, political subdivision, special district or public agency.

Article from http://www.calwatchdog.com/2010/12/01/group-touts-new-pension-initiative/

The group reported to be sponsoring the initiative has a website at http://www.californiapensionreform.com/ However, the initiative above is not presented there at this writing. The website is out of date – it still lists the late Assemblyman Keith Richman as an officer. The advisory board is listed as:

Mike Arno
Arno Political Consultants

Scott Baugh
Former Republican Leader, California Assembly

Fran Blackney
Clovis Chamber of Commerce

Ted Costa
People’s Advocate

Jon Coupal
Howard Jarvis Taxpayers Association

Kris Hunt
Contra Costa County Taxpayers Association

John Moorlach
Orange County Supervisor / 2nd District

Richard Rider
San Diego Tax Fighters

Marc Roberts
Associated Pension Consultants

Reed Royalty
Orange County Taxpayers Association

Lew Uhler
National Tax Limitation Committee

December Brings a Special Legislative Session on the State Budget

One of Governor Schwarzenegger’s last major actions was to call an emergency session on the state budget. Although he is a lame duck at this point and will be out of office in early January, the legislature begins anew in December.

The state is carrying a legacy debt of about $6 billion in the general fund (i.e., the fund is projected to close on June 30, 2011 with a negative balance of -$6 billion). A projected operating deficit on a workload basis for next year – the year beginning July 1, 2011 – is about $19 billion. Of course, we won’t ultimately just have a workload budget – something will be done to modify the budget.

However, it would be surprising if much were done in the emergency session called by the outgoing governor. The legislature is more likely to await Jerry Brown. However, Governor Schwarzenegger will surely make a budget proposal of some type and Brown might at least comment on it.

Note that although voters made it technically easier to pass a budget last month – a simple majority of the legislature can now do it. But the 2/3 requirement on taxes remains in effect. And a tightened 2/3 rule was imposed by the voters on fees. In addition, tighter limits were placed on local fund raids by the state. So the legislature has less room to maneuver towards a budget that a majority will want to pass. UC is unlikely to escape the fiscal turmoil and could even experience some kind of mid-year cut.

Of course, December will also bring the special session of the Regents on Dec. 13th to deal with the Yudof proposals on post-employment benefits (pension, retiree health).

Update: http://www.sacbee.com/2010/12/02/3226899/democrats-likely-to-ignore-schwarzeneggers.html#mi_rss=State%20Politics

Some music for Dec. 1 while you contemplate what awaits: