Briefing Report: Public Employees' Retirement - Costs and Proposed Reforms

Wednesday, June 23, 2010

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Over the past few years, Californians have grown increasingly dissatisfied with the generous retirement benefits provided to public employees -- and for good reason. Historically, health and pension benefits for government workers have been higher than those of their private sector counterparts to compensate for lower wages. However, public labor unions have been able to carve out lucrative raises and liberal retirement packages for their members so the combined wage and benefit package is oftentimes better than those in the private sector. These benefit increases have been off radar in years where stock market gains have funded the bulk, if not all of the costs for public employee retirement benefits. The issue has come under great scrutiny recently due to stock market losses, which forces the state and in turn, the taxpayers, to pay for public employees’ retirement amid an unprecedented fiscal crisis and record-high private sector unemployment.

This report discusses the difference between public and private sector retirement, California’s public retirement systems’ economic outlook, and strategies implemented in other states for reducing public employee retirement costs.

Read Full Report (pdf)