California's Jerry Brown is getting ready to propose what the AP calls "sweeping rollbacks" in public-sector pensions, raising the retirement age for non-public safety employees to 67, ending abuses like spiking and "air time," and mandating a hybrid system that has a traditional pension component and an added 401(k)-style defined-contribution plan.
Based on the Sacramento Bee's description of the plan, the change to a hybrid plan is far less radical than it needs to be to improve mobility of benefits for young workers (teachers included). The new system would still provide 2/3 of projected retirement income out of a defined-benefit plan workers would only earn after a full, multi-decade career in public service. It's also hard not to wonder how deeply Gov. Brown believes in this plan, since he pitched a much less serious reform in the spring that failed due to Republican opposition.
It's a better start to the reform process in California than that earlier plan, however. If Brown sticks to his guns against his union backers and gets these reforms through the legislature, it would be a positive first step in fixing the state's broken system of public employee compensation. Our latest report, Halting a Runaway Train: Reforming Teacher Pensions for the 21st Century, provides a case study of how the federal government enacted similar reforms in the 1980s. Check it out, Jerry!
? Chris Tessone