California pension reform group files two new ballot initiatives

Pension Spike

From the California Foundation for Fiscal Responsibility


California pension reform group files two new ballot initiatives

Yesterday (11/5) the California Foundation for Fiscal Responsibility (CFFR) filed with the Attorney General’s office two pension and retiree health care initiatives that would save state and local government agencies hundreds of billions of dollars in retiree benefit costs and would end the expensive abuses which have increased costs and run up huge deficits for public defined benefit pension plans. The initiatives are identical except for the voter requirement that allows agencies to increase benefits for new workers. CFFR plans to poll voters to determine which version they prefer.

“With more than $200 billion in retirement debts and skyrocketing costs crowding out the investments we need in education, health care, transportation, public safety and the environment, it is time for a statewide solution to our retirement benefits crisis. By requiring all new non-safety public employees at all levels of government to work until their Social Security retirement age for full benefits and ending the politicians’ raids and abuses of public pension funds, California public agencies can offer secure retirement benefits that are fair for taxpayers and their employees,” said CFFR president and initiative proponent Marcia Fritz.

The Public Employee Benefits Reform Initiative would apply its benefits cap to the defined benefit plans offered to all new state, local government, school district, university and special district employees beginning July 1, 2011.

“California’s huge legacy retirement costs have been aggravated by pension benefit enhancements granted to public employees over the last 10 years combined with average pay increases of 50% to 70% both at the state level and among local agencies,” said Fritz.

“Actuaries did not anticipate wage hikes of this magnitude, nor did they expect the market losses that have seriously reduced the value of pension assets set aside to pay for pension benefits,” she added.
“Workers are retiring earlier because many can receive more in retirement than while working. Defined benefit plans are viable tools if they are not abused, but generous guaranteed retirement benefits plus high wages have overburdened our public pension systems and ultimately our taxpayers.”

“Sound fiscal policy, simple budget planning, and retirement benefits that ensure a dignified and secure retirement after a full career of public service are all possible, and this initiative will help lead the way for all levels of California government,” said Fritz.

Preliminary estimates show the initiative would save more than $1 billion the first year, and $500 billion over 30 years as new workers replace those who retire by raising their full retirement ages and limiting guaranteed benefit formulas to 75% replacement income in retirement for a full career’s work. Agencies may continue to offer supplemental defined contribution plans to their employees.
Significant additional savings would come from requiring new employees to wait until they reach MediCare eligibility age before supplemental retiree health benefits begin.

The “10 Commandments” that form the basis of both versions of the initiative include:

– Honor all pension contracts
– Death and disability benefits shall not be changed
– Pension benefits must be fair and adequate
– Pension benefits must be guaranteed
– Pension spiking abuse must be discouraged
– Future generations should not pay retirement costs for today’s
– Retiree health funds must not be diverted to any other purpose
– Retirement benefit costs must be sustainable
– Local agency voters shall retain the right to change benefits
– Bankruptcies must be avoided

The two versions of the initiative can be found here:

CFFR is a non-profit political organization committed to educating the public and key decision makers about California public employee retirement benefit issues and developing fiscally responsible solutions that are fair to employees, employers and taxpayers. CFFR believes managing the pension and retiree health care obligations promised to public employees is the most critical public finance issue of this decade.


Marcia Fritz, President
Phone: 916-966-9366

California Foundation for Fiscal Responsibility
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