State and local government pension
costs have shot through the roof and are threatening the funding of essential
programs throughout California. It is time for action to stanch the bleeding.
There are growing signs that this will be a front-burner topic for the state
Legislature in 2005. Taxpayers are well-advised to watch developments closely.
Thanks to significant news coverage, particularly in The Sacramento Bee,
the Legislature is scheduled to conduct a special hearing on January 24 in
Sacramento. The Bee has uncovered outrageous abuse of disability
retirements among top officers of the California Highway Patrol. Also, there are
alarming numbers of sheriff’s and fire department personnel filing claims for
injuries as they prepare retirement papers in Los Angeles County, according to
the Los Angeles Daily News.
Meanwhile, the California Public Employees’ Retirement System board, which is
dominated by public employee unions, has voted unanimously to sponsor
legislation to help clamp down on disability retirement fraud.
Quick action by the Legislature is needed on measures to order regular medical
examinations to make sure those on disability retirement – getting preferential
tax treatment – are not misusing the system. Disability retirement was intended
to generously protect public safety officers and their families if disabling
injuries are sustained while working to safeguard Californians. Unfortunately,
the program has wandered far from this objective.
There must be a well-defined crime of disability pension fraud with criminal and
civil penalties, and restitution. Beyond that, there must be review of
disability retirements that may be sanctioned under current law but allow
individuals to launch lucrative second careers. A final legislative package,
whether sponsored by CalPERS or others, must not be watered down as it goes
through the process.
The state could roll back its 1990 decision to base pensions on final year
salaries, which has allowed many to spike their pensions, according to a report
in The Bee. Cal-Tax agrees.
While pursuing these fixes in the system, the Legislature must also embrace
sweeping reform of the entire public retirement system, state and local. This
would prevent future state and local budget problems that now amount to billions
Cal-Tax supports ACA 5, by Assemblyman Keith Richman, which would take
future state workers out of the overly generous defined benefit pension system
that will be impossible for taxpayers to pay for and place them in a defined
contribution plan, similar to the 401(k) investment retirement plans available
to the vast majority of those not working in government jobs.
Those currently employed with the state or local government would continue with
the program they have, which has become unaffordable as governing bodies, under
intense lobbying pressure from increasingly powerful public employee unions,
have approved more and more pay and benefits.
Assemblyman Richman calls the runaway costs of public pensions a “ticking time
bomb.” He is absolutely correct.