California Pension Reform Fact Sheet

Wednesday, February 22, 2012

“We don't have too much choice here. We've got to fix the pension system…In my opinion, this is the minimum. This is what makes sense, consistent with the law and even consistent with what I think the Legislature can get to."
-- Governor Brown at the December 1, 2011 Joint Legislative Conference Committee on Public Employee Pensions

Republicans agree to author Governor Brown’s pension reform: Senate Republican Leader Bob Huff and Assembly Republican Leader Connie Conway joined by Republican legislators in authoring the Governor’s pension reform language

  • Governor Brown’s pension reform language sets a sensible, necessary floor to help fund future pensions and deserves an up or down vote in the Legislature.

  • Senate Republicans stand ready to reach across the aisle and pass the Governor’s pension reform exactly as proposed, without any strings attached.

  • With the public demanding change, it is critical that the people have a chance to vote on it at the ballot. By requiring a vote of the people, future Legislatures cannot rollback these necessary reforms in the future.

  • The Governor himself has defined the current pension system as a “Ponzi Scheme”

  • According to the latest PPIC poll, 68 percent of all adults favored a switch to a defined contribution system, and 64 percent of all state employees also favored such a change.

  • Senate Republicans stand with the Governor and 83 percent of all Californians who say the amount of government spending on pensions is a problem.

“As for pensions, I have put forth my 12-point proposal. Examine it. Improve it. But please take up the issue and do something real. I am committed to pension reform because I believe there is a real problem. Three times as many people are retiring as are entering the workforce. That arithmetic doesn’t add up. In addition, benefits, contributions, and the age of retirement all have to balance. I don’t believe they do today. So we have to take action. And we should do it this year.”
-- Governor Brown, State of the State Address, January 18, 2012

Immediate leadership is needed to achieve any meaningful reform. The independent ballot effort to allow the public to vote on this critical issue has been thwarted. It is now the Legislature’s responsibility to pass the Governor’s pension reform proposal and help ease the burden on state and local governments.

  • According to the Department of Finance, the state will spend $4.8 billion or 3.5% of state spending on pension costs in the upcoming budget year.

  • Local government budgets in California are also being squeezed by pension obligations.

    • California’s local, or independent (non-CalPERS) pension funds are $135 billion in debt and on average are just 53.6% funded.

    • According to the most recent independent Stanford University report, between 1999 and 2010, pension spending grew at 11.4 percent per year, more than the rate of growth for any other expenditure category out of the top 24 local non-CalPERS retirements systems in California.

    • San Jose is spending more than 20 percent of its general fund on retirement costs

    • In Sacramento, $1 of every $6 in the general fund pays for employee pensions.