2015/16 Reed and DeMaio Pension Reform Ballot Initiative
In early June former San Jose Mayor Chuck Reed and former San Diego City Councilman Carl DeMaio released the details of their long-anticipated pension reform ballot initiative they are hoping to put on the November 2016 ballot. They are calling it the “Voter Empowerment Act.”
The main push of the initiative is to have the general public vote on retirement benefits for public employees.
We will provide a more detailed comment after reviewing the proposed initiative but wanted to alert you that the language has been made public. The Attorney General has 60 days to do title and summary before circulation can start.
Here are a few media stories for more details:
California pension initiative requires public vote on retirement benefits
The Sacramento Bee (6-4-15)
Former California city officials move to put pensions on ballot
Bloomberg Business (6-4-15)
Initiative could switch new hires to 401(k) plans
2013 Reed “Pension Insecurity” Reform Initiative
Mayor Reed has submitted language to the California Office of the Attorney General for consideration for the November 2014 election. The CalRTA Board of Directors has adopted an action plan to address this initiative.
CalRTA’s Bylaws and objectives are to protect pension benefits for current and future retired educators. The proposed initiative, if qualified, is contrary to those objectives.
UPDATE 3-14: Mayor Reed did not win his suit. Because there isn’t enough time to gather signatures for the November election he has officially halted the 2014 campaign. Speculation right now is that he’ll look at getting an initiative on the 2016 ballot. Watch for updates!
UPDATE 2-14: Mayor Reed has filed suit against the Attorney General over the wording of the ballot summary. Reed’s team won’t gather signatures until after the suit is resolved … and with time running out it appears this initiative probably won’t make it on the November 2014 ballot. Of course there’s always 2016 …
UPDATE 1-14: The Attorney General of California has prepared the title and summary of the Chuck Reed/John Arnold initiative. The word “eliminates” was used in the description, which polled as about the only word that would cause people to vote against the initiative. Reed has publicly said he’ll decide by the end of January how he plans to proceed.
CalRTA and the CalRTA PAC will launch next steps as needed once Reed makes his plans known. Watch for updates.
2012 Pension Reform Impacts on CalSTRS
CalSTRS has conducted an assessment of AB 340, the California Public Employees’ Pension Reform Act of 2013, and its impact on CalSTRS members and operations and outlined key changes. Details
Governor Brown’s 2012 Pension Reform Plan
Governor Brown has proposed a Twelve Point Pension Reform proposal. Unlike his spring proposals he did not include any reference to improving CalSTRS funding; however, in response to a question regarding CalSTRS funding, the Governor indicated they were working on it.
Most of the proposals appear to be targeted at CalPERS and local public employee pension plans. There are some points that would affect current and future CalSTRS members; however, the Governor was unclear about those potential effects.
For example, it is clear that “air- time” could no longer be purchased after the effective date of its repeal. However, when the Governor proposed hybrid plans it was unclear if he was including CalSTRS, who already has a hybrid plan, in that proposal. The Governor’s proposal addresses return to work based on the CalPERS model. It is unclear whether he intends to have that same model apply to CalSTRS.
The Conference Committee on Public Employee Pensions is expected to use the Governor’s proposal as a starting point for their deliberations. We have no expectation they will adopt the proposal in totality as introduced by the Governor.
Here are the 12 Points of the Plan and who the change would affect:
1. Equal Sharing of Pension Costs: All Employees and Employers
2. “Hybrid” Risk-Sharing Pension Plan: New Employees
3. Increase Retirement Ages: New Employees
4. Require Three-Year Final Compensation to Stop Spiking: New Employees
5. Calculate Benefits Based on Regular, Recurring Pay to Stop Spiking: New Employees
6. Limit Post-Retirement Employment: All Employees
7. Felons Forfeit Pension Benefits: All Employees
8. Prohibit Retroactive Pension Increases: All Employees
9. Prohibit Pension Holidays: All Employees and Employers
10. Prohibit Purchases of Service Credit: All Employees
11. Increase Pension Board Independence and Expertise
12. Reduce Retiree Health Care Costs: State Employees
Here is a PDF file of the 12-point plan with more details on each item.