Former Assemblyman Richman’s Attack on Public Employee Pensions

Former Republican Assemblyman Keith Richman is at it again. Richman is on the attack and attempting to cut the pensions of public employees who serve our communities and our state.

The Richman Initiative will cost firefighters, teachers, police officers and state workers millions to defeat. Political observers say that Richman and his supporters are well on their way to collecting the 694,354 signatures needed, by Jan. 10, 2008, to qualify the initiative for the June 2008 ballot.

The Public Employee Benefits Reform Act which many refer to, as the Richman Initiative, calls for dramatic reductions in pensions for all new employees and would cut health benefits for those who cannot work until age 65, punishing those who get sick or are injured before they retire. The initiative also calls for increasing the retirement age and lowering benefits for new state and local government employees hired after July 1, 2009.

For example, an employee who works 30 years and retires at age 60 would face a $10,000 reduction in annual pension, while getting no health benefits.

Having learned from his previous attempts to slash public employee pensions Richman is this time proposing that his initiative would only apply to state and local government workers hired after July 1, 2009. This forces public employees into a divisive two-tiered system, and would make it even more challenging to recruit state employees, firefighters, police officers, and teachers.

Let’s look for a moment at the people who serve the public.

The vast majority of state workers for example, make a lower middle-class to middle-class income. Contrary to popular belief they do not make a lot of money compared to the private sector. Most public employees understand that they could make significantly more money if they worked in the private sector; however, since many grew up believing in the concept of serving the community through public service they have opted to work in state government, or as a teacher, firefighter, or police officer. They understand that they will have a decent retirement, not a lavish one, when they retire, because they pay into their retirement system every month.

We all know that teachers deserve more pay than what they earn. I was quite surprised to learn from my mother-in-law, and sisters-in-law that they have to purchase supplies for school, since their schools do not provide all of the supplies needed for children. I realize I’m aging myself, but I don’t recall Ms. Chamberlin or Mr. Sousa having to purchase their supplies when I attended elementary school. This, on top of the long hours that they put in, for the love of children and learning…teachers do not need to be put in a position to defend their retirement. At a time California and the nation are facing a critical teacher shortage teachers should not have to fight to protect their retirement.

Then we have firefighters and police officers who put their lives on the line day in and day out. You mean to tell me that if they suffer a burn, or a critical injury that they are then going to be punished for having to take an early retirement?

Why should we punish the very people who do the hard work of serving our communities and our state?

According to the Sacramento Bee, Governor Schwarzenegger and the leaders of the Legislature appointed a bi-partisan commission early this year to study benefits and to propose long-term funding mechanisms for CalPERS. It would seem fiscally responsible for Richman to at least allow the bi-partisan commission to develop and propose solutions before subjecting public employees to yet another multimillion-dollar, divisive initiative campaign that’s going to require public employees to protect their retirement.

The Sacramento Bee further reported that the “crisis” [of CalPERS] is wildly overblown. New federal accounting standards simply require that anticipated retirement obligations be calculated and reported. California does not owe a nickel more for employee health care benefits today than it did before the accounting standards were adopted.

California’s Public Employee Retirement System (CalPERS) is, in fact, quite healthy thanks to a record of double-digit growth in investment gains. In the past 12 months, CalPERS’ investment portfolio grew by more than 19 percent, the highest in nine years, and double the assumed rate. Many pension plans will be 100 percent funded. For decades about 75 percent of the cost of benefits has been funded by return on investments – public agencies and employees pay the rest.

The Bee quoted State Controller John Chiang as saying that, “it was not a crisis 30 years ago, it was not a crisis yesterday and it is not a crisis today…and if we work toward a plan to pay this obligation in a reasoned manner it will not be a crisis 30 years from now.

The Vanguard asks, why the attack on public employees? Why the attack when Richman is receiving his CA State Assembly Retirement? I’ve attempted to find out what his retirement will look like, but still haven’t found out what members of the Assembly receive for their retirement.

—Cecilia Escamilla-Greenwald sitting in for Doug Paul Davis

Author

  • David Greenwald

    Greenwald is the founder, editor, and executive director of the Davis Vanguard. He founded the Vanguard in 2006. David Greenwald moved to Davis in 1996 to attend Graduate School at UC Davis in Political Science. He lives in South Davis with his wife Cecilia Escamilla Greenwald and three children.

Categories:

Labor Issues

124 comments

  1. I read this entire piece thinking, gee, this sounds like a press piece written by a hack for a public employees labor union, before I saw who wrote it. Enough said.

    — Mike S.

  2. I read this entire piece thinking, gee, this sounds like a press piece written by a hack for a public employees labor union, before I saw who wrote it. Enough said.

    — Mike S.

  3. I read this entire piece thinking, gee, this sounds like a press piece written by a hack for a public employees labor union, before I saw who wrote it. Enough said.

    — Mike S.

  4. I read this entire piece thinking, gee, this sounds like a press piece written by a hack for a public employees labor union, before I saw who wrote it. Enough said.

    — Mike S.

  5. Here is a more detailed description of the initiative, from the Sacramento Bee last June:

    Initiative would take on pensions
    New government employees would get less, at an older age.
    By John Hill – Bee Capitol Bureau

    Published 12:00 am PDT Friday, June 22, 2007

    A foundation led by former Assemblyman Keith Richman filed an initiative Thursday that would slash California’s state and local government pension costs by offering a less generous retirement allowance to new employees and raising the age at which they qualify for full benefits.

    “It’s not fair that people in the private sector are working well into their 60s and 70s to pay for extravagant pensions for public employees who can retire at 50 or 55,” said Richman, a former Republican Assemblyman from Northridge who is now president of the California Foundation for Fiscal Responsibility.

    The initiative, if it qualified for the ballot, would face stiff opposition from deep-pocketed public employee unions, which in 2005 fought off another attempt to scrap the current pension formula.

    “I think it’s as serious as a heart attack,” said J.J. Jelincic, president of the California State Employees Association. “It’s part of a national agenda attacking defined benefit plans and the interests of working folks.”

    Richman’s 2005 proposal would have scrapped the traditional pension plan for new employees in favor of a 401(k)-style retirement account subject to the ups and downs of investment funds.

    This proposal preserves the traditional plan, which guarantees a certain payout in retirement years, but cuts the formula that determines pensions and extends the years an employee would have to work to get them.

    Rank-and-file workers in the state’s current system, for instance, now get 2 percent of their highest pay multiplied by the number of years of service at the age of 55.

    Under the initiative filed Thursday, workers who also qualify for Social Security would get only 1 percent for each year worked, and they would qualify for full benefits at the same age they become eligible for Social Security, 65 to 67.

    Those who don’t qualify for Social Security would get 1.5 percent for each year worked.

    Peace officers and firefighters would get 2.2 percent for each year worked at the age of 55. Currently, the state and many local governments pay peace officers and firefighters 3 percent and allow them to retire as early as age 50.

    Another change would base the pension payout on the highest consecutive five years of pay, instead of the one year or three years now in use. That move would tend to reduce retirement allowances, because a five-year average is normally lower than the highest year of pay or a three-year average.

    The proposal would forbid public agencies from “raiding” pension funds for other purposes, and require them to make full payments into the retirement systems even during good years when investment returns are high.

    Richman said the initiative would not touch death and disability benefits. Gov. Arnold Schwarzenegger pulled the plug on the 2005 initiative after public employee unions waged a blistering campaign saying it would end death and disability benefits for fallen peace officers and others.

    The new initiative would apply to state and local government workers hired after July 1, 2009.

    “It doesn’t touch the benefits at all for current and retired workers,” Richman said. “We think it’s important to keep the promises that have been made to current employees and retirees.”

    Richman said his plan would save state and local governments $500 billion over the next 30 years.

    He declined to say where he expects to raise the money to gather signatures to qualify the initiative for the ballot.

    Schwarzenegger spokesman Aaron McLear said the Governor’s Office had not yet looked at Richman’s proposal. He added, “We welcome all ideas to the table. This is obviously part of the public dialogue.”

    But Dave Low, assistant director of governmental relations for the California School Employees Association, said that Schwarzenegger is unlikely to back a proposal that doesn’t take into account the work of a commission he formed to address public pensions, scheduled to come out with recommendations in January.

    “It seems that Richman is way out ahead of the governor on this one,” said Low, one of the Legislature’s appointees to the commission. “Why not wait?”

    Jelincic questioned the rationale for the initiative, saying that the state’s biggest pension system, the California Public Employees’ Retirement System, is not severely underfunded.

    If the initiative passed, governments that offered reduced retirement benefits would have to sweeten the pot for potential workers by raising pay, he said.

    Richman, however, disputed the contention that government workers are paid less than their private sector counterparts and need better retirements as an incentive.

    “Numerous studies over recent years have demonstrated that public employee salaries are higher than those in the private sector, and the benefits are much higher,” he said.

  6. Here is a more detailed description of the initiative, from the Sacramento Bee last June:

    Initiative would take on pensions
    New government employees would get less, at an older age.
    By John Hill – Bee Capitol Bureau

    Published 12:00 am PDT Friday, June 22, 2007

    A foundation led by former Assemblyman Keith Richman filed an initiative Thursday that would slash California’s state and local government pension costs by offering a less generous retirement allowance to new employees and raising the age at which they qualify for full benefits.

    “It’s not fair that people in the private sector are working well into their 60s and 70s to pay for extravagant pensions for public employees who can retire at 50 or 55,” said Richman, a former Republican Assemblyman from Northridge who is now president of the California Foundation for Fiscal Responsibility.

    The initiative, if it qualified for the ballot, would face stiff opposition from deep-pocketed public employee unions, which in 2005 fought off another attempt to scrap the current pension formula.

    “I think it’s as serious as a heart attack,” said J.J. Jelincic, president of the California State Employees Association. “It’s part of a national agenda attacking defined benefit plans and the interests of working folks.”

    Richman’s 2005 proposal would have scrapped the traditional pension plan for new employees in favor of a 401(k)-style retirement account subject to the ups and downs of investment funds.

    This proposal preserves the traditional plan, which guarantees a certain payout in retirement years, but cuts the formula that determines pensions and extends the years an employee would have to work to get them.

    Rank-and-file workers in the state’s current system, for instance, now get 2 percent of their highest pay multiplied by the number of years of service at the age of 55.

    Under the initiative filed Thursday, workers who also qualify for Social Security would get only 1 percent for each year worked, and they would qualify for full benefits at the same age they become eligible for Social Security, 65 to 67.

    Those who don’t qualify for Social Security would get 1.5 percent for each year worked.

    Peace officers and firefighters would get 2.2 percent for each year worked at the age of 55. Currently, the state and many local governments pay peace officers and firefighters 3 percent and allow them to retire as early as age 50.

    Another change would base the pension payout on the highest consecutive five years of pay, instead of the one year or three years now in use. That move would tend to reduce retirement allowances, because a five-year average is normally lower than the highest year of pay or a three-year average.

    The proposal would forbid public agencies from “raiding” pension funds for other purposes, and require them to make full payments into the retirement systems even during good years when investment returns are high.

    Richman said the initiative would not touch death and disability benefits. Gov. Arnold Schwarzenegger pulled the plug on the 2005 initiative after public employee unions waged a blistering campaign saying it would end death and disability benefits for fallen peace officers and others.

    The new initiative would apply to state and local government workers hired after July 1, 2009.

    “It doesn’t touch the benefits at all for current and retired workers,” Richman said. “We think it’s important to keep the promises that have been made to current employees and retirees.”

    Richman said his plan would save state and local governments $500 billion over the next 30 years.

    He declined to say where he expects to raise the money to gather signatures to qualify the initiative for the ballot.

    Schwarzenegger spokesman Aaron McLear said the Governor’s Office had not yet looked at Richman’s proposal. He added, “We welcome all ideas to the table. This is obviously part of the public dialogue.”

    But Dave Low, assistant director of governmental relations for the California School Employees Association, said that Schwarzenegger is unlikely to back a proposal that doesn’t take into account the work of a commission he formed to address public pensions, scheduled to come out with recommendations in January.

    “It seems that Richman is way out ahead of the governor on this one,” said Low, one of the Legislature’s appointees to the commission. “Why not wait?”

    Jelincic questioned the rationale for the initiative, saying that the state’s biggest pension system, the California Public Employees’ Retirement System, is not severely underfunded.

    If the initiative passed, governments that offered reduced retirement benefits would have to sweeten the pot for potential workers by raising pay, he said.

    Richman, however, disputed the contention that government workers are paid less than their private sector counterparts and need better retirements as an incentive.

    “Numerous studies over recent years have demonstrated that public employee salaries are higher than those in the private sector, and the benefits are much higher,” he said.

  7. Here is a more detailed description of the initiative, from the Sacramento Bee last June:

    Initiative would take on pensions
    New government employees would get less, at an older age.
    By John Hill – Bee Capitol Bureau

    Published 12:00 am PDT Friday, June 22, 2007

    A foundation led by former Assemblyman Keith Richman filed an initiative Thursday that would slash California’s state and local government pension costs by offering a less generous retirement allowance to new employees and raising the age at which they qualify for full benefits.

    “It’s not fair that people in the private sector are working well into their 60s and 70s to pay for extravagant pensions for public employees who can retire at 50 or 55,” said Richman, a former Republican Assemblyman from Northridge who is now president of the California Foundation for Fiscal Responsibility.

    The initiative, if it qualified for the ballot, would face stiff opposition from deep-pocketed public employee unions, which in 2005 fought off another attempt to scrap the current pension formula.

    “I think it’s as serious as a heart attack,” said J.J. Jelincic, president of the California State Employees Association. “It’s part of a national agenda attacking defined benefit plans and the interests of working folks.”

    Richman’s 2005 proposal would have scrapped the traditional pension plan for new employees in favor of a 401(k)-style retirement account subject to the ups and downs of investment funds.

    This proposal preserves the traditional plan, which guarantees a certain payout in retirement years, but cuts the formula that determines pensions and extends the years an employee would have to work to get them.

    Rank-and-file workers in the state’s current system, for instance, now get 2 percent of their highest pay multiplied by the number of years of service at the age of 55.

    Under the initiative filed Thursday, workers who also qualify for Social Security would get only 1 percent for each year worked, and they would qualify for full benefits at the same age they become eligible for Social Security, 65 to 67.

    Those who don’t qualify for Social Security would get 1.5 percent for each year worked.

    Peace officers and firefighters would get 2.2 percent for each year worked at the age of 55. Currently, the state and many local governments pay peace officers and firefighters 3 percent and allow them to retire as early as age 50.

    Another change would base the pension payout on the highest consecutive five years of pay, instead of the one year or three years now in use. That move would tend to reduce retirement allowances, because a five-year average is normally lower than the highest year of pay or a three-year average.

    The proposal would forbid public agencies from “raiding” pension funds for other purposes, and require them to make full payments into the retirement systems even during good years when investment returns are high.

    Richman said the initiative would not touch death and disability benefits. Gov. Arnold Schwarzenegger pulled the plug on the 2005 initiative after public employee unions waged a blistering campaign saying it would end death and disability benefits for fallen peace officers and others.

    The new initiative would apply to state and local government workers hired after July 1, 2009.

    “It doesn’t touch the benefits at all for current and retired workers,” Richman said. “We think it’s important to keep the promises that have been made to current employees and retirees.”

    Richman said his plan would save state and local governments $500 billion over the next 30 years.

    He declined to say where he expects to raise the money to gather signatures to qualify the initiative for the ballot.

    Schwarzenegger spokesman Aaron McLear said the Governor’s Office had not yet looked at Richman’s proposal. He added, “We welcome all ideas to the table. This is obviously part of the public dialogue.”

    But Dave Low, assistant director of governmental relations for the California School Employees Association, said that Schwarzenegger is unlikely to back a proposal that doesn’t take into account the work of a commission he formed to address public pensions, scheduled to come out with recommendations in January.

    “It seems that Richman is way out ahead of the governor on this one,” said Low, one of the Legislature’s appointees to the commission. “Why not wait?”

    Jelincic questioned the rationale for the initiative, saying that the state’s biggest pension system, the California Public Employees’ Retirement System, is not severely underfunded.

    If the initiative passed, governments that offered reduced retirement benefits would have to sweeten the pot for potential workers by raising pay, he said.

    Richman, however, disputed the contention that government workers are paid less than their private sector counterparts and need better retirements as an incentive.

    “Numerous studies over recent years have demonstrated that public employee salaries are higher than those in the private sector, and the benefits are much higher,” he said.

  8. Here is a more detailed description of the initiative, from the Sacramento Bee last June:

    Initiative would take on pensions
    New government employees would get less, at an older age.
    By John Hill – Bee Capitol Bureau

    Published 12:00 am PDT Friday, June 22, 2007

    A foundation led by former Assemblyman Keith Richman filed an initiative Thursday that would slash California’s state and local government pension costs by offering a less generous retirement allowance to new employees and raising the age at which they qualify for full benefits.

    “It’s not fair that people in the private sector are working well into their 60s and 70s to pay for extravagant pensions for public employees who can retire at 50 or 55,” said Richman, a former Republican Assemblyman from Northridge who is now president of the California Foundation for Fiscal Responsibility.

    The initiative, if it qualified for the ballot, would face stiff opposition from deep-pocketed public employee unions, which in 2005 fought off another attempt to scrap the current pension formula.

    “I think it’s as serious as a heart attack,” said J.J. Jelincic, president of the California State Employees Association. “It’s part of a national agenda attacking defined benefit plans and the interests of working folks.”

    Richman’s 2005 proposal would have scrapped the traditional pension plan for new employees in favor of a 401(k)-style retirement account subject to the ups and downs of investment funds.

    This proposal preserves the traditional plan, which guarantees a certain payout in retirement years, but cuts the formula that determines pensions and extends the years an employee would have to work to get them.

    Rank-and-file workers in the state’s current system, for instance, now get 2 percent of their highest pay multiplied by the number of years of service at the age of 55.

    Under the initiative filed Thursday, workers who also qualify for Social Security would get only 1 percent for each year worked, and they would qualify for full benefits at the same age they become eligible for Social Security, 65 to 67.

    Those who don’t qualify for Social Security would get 1.5 percent for each year worked.

    Peace officers and firefighters would get 2.2 percent for each year worked at the age of 55. Currently, the state and many local governments pay peace officers and firefighters 3 percent and allow them to retire as early as age 50.

    Another change would base the pension payout on the highest consecutive five years of pay, instead of the one year or three years now in use. That move would tend to reduce retirement allowances, because a five-year average is normally lower than the highest year of pay or a three-year average.

    The proposal would forbid public agencies from “raiding” pension funds for other purposes, and require them to make full payments into the retirement systems even during good years when investment returns are high.

    Richman said the initiative would not touch death and disability benefits. Gov. Arnold Schwarzenegger pulled the plug on the 2005 initiative after public employee unions waged a blistering campaign saying it would end death and disability benefits for fallen peace officers and others.

    The new initiative would apply to state and local government workers hired after July 1, 2009.

    “It doesn’t touch the benefits at all for current and retired workers,” Richman said. “We think it’s important to keep the promises that have been made to current employees and retirees.”

    Richman said his plan would save state and local governments $500 billion over the next 30 years.

    He declined to say where he expects to raise the money to gather signatures to qualify the initiative for the ballot.

    Schwarzenegger spokesman Aaron McLear said the Governor’s Office had not yet looked at Richman’s proposal. He added, “We welcome all ideas to the table. This is obviously part of the public dialogue.”

    But Dave Low, assistant director of governmental relations for the California School Employees Association, said that Schwarzenegger is unlikely to back a proposal that doesn’t take into account the work of a commission he formed to address public pensions, scheduled to come out with recommendations in January.

    “It seems that Richman is way out ahead of the governor on this one,” said Low, one of the Legislature’s appointees to the commission. “Why not wait?”

    Jelincic questioned the rationale for the initiative, saying that the state’s biggest pension system, the California Public Employees’ Retirement System, is not severely underfunded.

    If the initiative passed, governments that offered reduced retirement benefits would have to sweeten the pot for potential workers by raising pay, he said.

    Richman, however, disputed the contention that government workers are paid less than their private sector counterparts and need better retirements as an incentive.

    “Numerous studies over recent years have demonstrated that public employee salaries are higher than those in the private sector, and the benefits are much higher,” he said.

  9. “I am disappointed, why would it only apply to new hires rather than all public employees?”

    Already hired employees were hired with the understanding of what their retirment would look like. If you worked for the gov for 29 years under the beleif (or contract?? promise?) that you would have your benefits be paid for untill you die and then it is changed or due to end at 65 well, umm..strike?..
    I would imagine they would have some sort of legal obligation to follow through with what is promised. messy.

    gov workers look for the stability of the job. Some or maybe many private jobs pay higher but you have to deal with issues like companies folding, oops don’t have the money to pay you, yada yada. Without the stabililty of important things like retirment and benefits well then people might not be so intersted in gov jobs.

    great article!!!