Although Governor Arnold Schwarzenegger has pulled his pension
reform plan off the table for now, a representative from the local
State Employees’ International Union asked county supervisors
yesterday to request a study proving why the controversial plan
should never be brought back.
Hollister – Although Governor Arnold Schwarzenegger has pulled his pension reform plan off the table for now, a representative from the local State Employees’ International Union asked county supervisors yesterday to request a study proving why the controversial plan should never be brought back.
SEIU Organizer Mayra Mora urged supervisors Tuesday to commission a free actuarial study conducted by California Public Employees Retirement System (CalPERS) to show how much money a switch-over from a defined benefits system to the defined contribution system the governor supported could cost the county. Schwarzenegger recently pulled his backing of the proposed reform introduced by Assemblyman Keith Richman.
“He (Schwarzenegger) has been pretty adamant about saying ‘I’m not done with pension reform,'” Mora said.
The pension reform program would dismantle the California Public Employees Retirement System (CalPERS), the system all public employees currently use, Mora said. This system uses a defined benefits method, in which an employee’s number of years with an agency, his age and his most recent wage would be averaged out to determine a monthly stipend during retirement. CalPERS payments to California’s 600,000 public employees are pooled together and invested professionally, according to Mora.
In place of CalPERS, the state would mandate public employees to participate in a 401(k)-style plan, in which employees would be responsible for investing their own money, she said.
The success of both plans is contingent on the stock market’s performance, Mora said, but a poor investment or a market crash would have significantly less of an effect under the current plan than in the reform plan.
“The bill itself is very ambiguous,” she said.
The bill also included a clause that specifically states death and disability benefits are one of the reasons pension payments are so high, leading the SEIU to worry the defined contribution plan would strip away those benefits for the families of police and firemen. And the switch-over could also end up costing the county big bucks, Mora added.
Dan Pellissier, chief of staff for Assemblyman Richman’s office, refuted all of Mora’s claims.
“Nothing in our efforts have done anything to eliminate death and disability benefits. And we’ve never talked about dismantling CalPERS,” he said. “CalPERS will continue to hold the pension money for all employees hired before July 1, 2007 in just the same way.”
Los Angeles County recently commissioned a free actuarial study showing the cost of the switch for that county would be around $1 million a year, and the county would probably have to continue payments for 10 to 15 years, Mora said. Although the financial impact on San Benito County would be less because of its smaller size, the cost would still be significant, she said.
“Right now I don’t think any county has $1 million to spend. The effect on San Benito County would be proportional. What I mean by that is just as the $1 million would affect L.A. County, whatever we spent would affect us in the same way,” Mora said.
The board will probably defer to its budget and finance committee, made up of Supervisors Jaime De La Cruz and Don Marcus, to make a decision on commissioning the study, Monaco said.
De La Cruz said Tuesday he and Marcus would “definitely” be looking into the free actuarial study option.
“We’re (the finance committee) going to get together real soon, and the first thing we need to do is get objective data on the impact this would have on the county,” De La Cruz said. “We need to make sure that this is done in a fair and impartial way for the employees, because this is their retirement. This is their golden years. If there’s any information that can help us provide an intelligent position, we should definitely grab the advantage.”
No specific plans have been set yet.
