Pension Reform Initiative

In 2012, Reform California successfully filed, qualified, and passed the Proposition B Pension Reform Initiative in the City of San Diego. This landmark reform measure capped pension payouts for existing government employees and switched new employees to a simple and fair 401(k) defined-contribution plan.

With the success of Proposition B in hand, it is now time to take this proven reform model statewide to reform all state and local government pension benefit programs.

Unsustainable Pension Payouts for Government Workers Will Bankrupt California

Last year an assistant fire chief in Los Angeles received a government pension payout of $983,319. That’s not all. A city librarian in San Diego cashes $234,000 in government pension checks every year! A police captain banked $753,861 last year — and a city politician started cashing his pension checks at the young age of 32! Additional news on outrageous pension payouts and compensation packages on state and local government employees is available at TransparentCalifornia.org

According to a recent Stanford University study, California taxpayers are on the hook for at least $1.2 trillion in unfunded debt for state and local government retirement benefits. Each year state and local pension payments skyrocket higher and higher – in some jurisdictions increasing over 800 percent since 2000!

Every taxpayer dollar paid out for government pensions is a dollar less for important services – ranging from schools, libraries, public health, and road repairs. Politicians will continually push for higher taxes and fees to raise money to finance the debt for these government pensions. Taxpayers face a future of higher costs and lower services if we fail to act to reform these government pensions.

Unfortunately, politicians from both political parties have failed to act to solve the pension crisis in California state and local governments. These politicians fear the special interest power of government labor unions. Only citizens working together can do what is right to impose common-sense reform in our state and make government retirement benefits sustainable once again.

A Fair and Affordable Pension Reform Plan

Reform California has devised a way to save California from bankruptcy through a common-sense government pension reform plan. Our plan does three simple things:

• 401(k) Defined Contribution Program: all new hires will receive a simple 401(k) retirement benefit that is benchmarked to what regular taxpayers receive from local private employers. No better, no worse!
• Cap Pension Payouts: all existing government workers will receive whatever they have legally earned to date, but payouts will be reformed going forward to be more fair and sustainable. This will be accomplished through a combination of
• Transparency and Accountability Reforms: government pension programs are using Enron-style accounting to lie about the depth of the financial crisis. We must not only reform the financial practices, but end the conflicts-of-interest on pension boards. No pension benefit improvement should be made without approval by voters.

Next Steps in Our Campaign

Reform California and Carl DeMaio are currently pursuing a two-pronged strategy to reform unsustainable pensions for state and local government employees:

• Legal Challenges: Reform California is currently defending Prop B – San Diego Pension Reform from a frivolous lawsuit filed by the government employee union bosses. After facilitating wins in court to rollback illegal pension payouts, we will also take legal action against any illegal pension deals.
• Statewide Initiative: Reform California is working with a bipartisan coalition on a statewide Pension Reform Initiative.