Watchdog pushes statewide pension reform

SACRAMENTO — Local governments with looming pension issues may have to look to statewide reform for relief, according to a watchdog who spoke Wednesday at a Sacramento Press Club luncheon.

"I'm sure you agree with 80 percent of the voters that doing nothing is not an option," said Marcia Fritz, of California Foundation for Fiscal Responsibility. "We need to pay more to save more."

Fritz and Dave Low, chairman of Californians for Retirement Security, spoke on either side of the pension issue, with Fritz saying reform is desperately needed for many public employees and Low saying a few cases of pension abuse shouldn't be cause to dismantle the system.

Both gave credit to public agencies and employee unions statewide who have recently agreed to two-tier systems, where new employees receive less generous pensions than existing ones. Sutter County announced last year it was moving to such a system.

"The reality is, employees are paying more and benefits are going down," Low said. "We're committed to being part of the solution."

Fritz said for local governments that have done so, the next step is to eliminate the employer paying for the employees' share of pension contributions.

"If you're not doing that, you're not serious about reducing your pension deficit," she said.

Sutter and Yuba counties have also adopted plans to eliminate that benefit, but Pat Miller, president of the Sutter County Taxpayers Association, said Sutter County's approach to doing so needs work.

When it approved the phaseout, Miller said, Sutter County also approved a pay raise for employees to make up the difference.

"Because the employee's contribution is nontaxable, it's essentially a wash," she said.

On a statewide level, Fritz said, she saw a lot to support in a pension-reform proposal by Gov. Jerry Brown, including equal sharing of costs, higher retirement ages and curbs on "spiking" pay before retirement to boost overall pensions.

"It doesn't go far enough to pay down debt, but it's a start," Fritz said.

She earlier stated everything from higher taxes to more contributions from employers and employees were going to be needed, along with structural reform, to fix the problem.

Low said he supported parts of the governor's plan, such as an end to spiking, but worried other parts weren't realistic for many public employees.

Brown's hybrid plan, which relies on a combination of pensions, Social Security and savings, would be difficult or impossible for low-wage employees or those who don't receive Social Security, he said.

In Fritz's presentation, she said dire consequences could result if pensions reform doesn't happen. A study her group cited found pension costs rising at a faster percentage for counties and cities than any other sector, nearly 11 percent annually in the last decade.

CONTACT Ben van der Meer at bvandermeer@appealdemocrat.com or 749-4786. Find him on Facebook at /ADbvandermeer or on Twitter at @ADbvandermeer.