Senators Berryhill, Cannella, Emmerson and Harman Urge Joint Committee on Public-Employee Pensions to Pursue Reform Measures Outlined in SCA 13

Wednesday, October 26, 2011

SACRAMENTO - In light of today's meeting of the Joint Legislative Conference Committee on Public-Employee Pensions, Senators Berryhill, Cannella, Emmerson and Harman sent a letter to the committee yesterday afternoon urging members to pursue the pension reform measures outlined in Senate Constitutional Amendment 13, which was introduced in June. SCA 13 aims to craft a sustainable, actuarially sound pension system by pursuing reforms to end pension abuses, reduce unfunded pension liabilities and control ongoing costs. For more information about SCA 13, please click here to view the fact sheet.

The full text of the letter is below:

- - -

October 25, 2011

The Honorable Gloria Negrete McLeod
California State Senate
Room 4061
Sacramento, California 95814

The Honorable Warren Furutani
California State Assembly
Room 6025
Sacramento, California 95814

Dear Senator Negrete McLeod and Assemblyman Furutani:

We want to express our sincere appreciation to you and to the entire Joint Legislative Conference Committee on Public-Employee Pensions for the work it is about to undertake with regard to public-employee pension reform. As you know, estimates place the fiscal burden of public-employee pensions anywhere between $100 billion and $500 billion. Regardless of which set of numbers you accept, it's clear that California, its cities, and its counties must face this growing fiscal crisis.

Last spring, in an effort to address some of the structural problems plaguing our state, we developed a number of meaningful reforms to our public-employee pension systems. Governor Brown subsequently pledged to pursue a 12-point pension reform plan that closely mirrored our policy objectives, forming the foundation for an honest pension reform debate.

Senate Constitutional Amendment 13, the measure we introduced in June, seeks to address not only the “easy” fixes we all agree must be made - spiking and double dipping, for example - but also the underlying structural issues that contribute to the problems faced by state and local governments. Globally, our reforms end pension abuses, reduce unfunded pension liabilities, and control costs to ensure the sustainability of our public-employee pension systems.

Specifically, SCA 13 offers new public employees a hybrid between the defined-benefit plans most public-employee unions currently have and the defined-contribution plans most private-sector companies offer. Employees would be required to contribute more toward their benefits and would have the additional opportunity to take advantage of a 401K-style plan they could manage themselves.

We also propose capping pensions, a simple, direct way to end the outrageous payouts some public employees have gotten, which in turn have made headlines while draining precious state and local resources.

With regard to abuse, we propose to end pension-spiking practices by requiring that benefits be based on an employee's highest salary, averaged over five years. Furthermore, pension benefits would be calculated based only on an employee's salary - not counting overtime, uniform allowances, car allowances, etc. Double dipping and so called “airtime” purchases are also eliminated under SCA 13.

Frankly, crafting a sustainable, actuarially sound pension system that curbs abuse - which we have endeavored to do through SCA 13 - requires a whole host of reforms above and beyond those we have outlined thus far. That said, the reforms mentioned above are critically important and should serve as a strong starting point for any meaningful pension reform debate.

We are proud of the months of work we have dedicated toward solving this very real crisis, and we hope you will accept our offer to serve as willing participants and as resources in the weeks ahead as your committee continues its work to fix our state's public-employee pension systems.

Sincerely,

Tom Berryhill
Senator, 14th District

Anthony Cannella
Senator, 12th District

Bill Emmerson
Senator, 37th District

Tom Harman
Senator, 35th District

Enclosure

cc:
Members of the Joint Legislative Conference Committee on Public-Employee Pensions
The Honorable Darrell Steinberg
The Honorable John Perez
The Honorable Bob Dutton
The Honorable Connie Conway

# # #