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Domino Effect: Pension Cutters Gamble on a California Ballot Measure

9:29 am in Pension by Gary Cohn


 

Jon Coupal is nothing if not blunt when he describes one motive behind a Ventura County ballot measure that would replace the “defined benefit” pensions currently enjoyed by county employees and replace them with 401(k)-type plans for all future hires.

“This is meant to be a template for other counties,” Coupal tells Capital & Main. By that, the Howard Jarvis Taxpayers Association’s president means the measure’s conservative and libertarian backers see the “Sustainable Retirement System Initiative” as the newest and most promising weapon in their assault on California’s public employee retirement plans. Having failed to place similar measures on state ballots in  2012 and 2014, a coalition of wealthy individuals, anti-tax activists and government privatizers has seized on an aspect of California law that allows 20 counties to fashion their own public employee retirement policies apart from the CalPERS system that administers such policies for nearly all of the state’s remaining 38 counties.

Ventura, with its postcard shoreline, rugged mountains and groves of avocado and lemon trees, is one of the 20 so-called ’37 Act counties whose retirement systems operate under the County Employees Retirement Law of 1937. These range from Los Angeles County, the most populous in the nation with nearly 10 million people, to sparsely populated Mendocino County along California’s northern coast. Few people doubt that Ventura, which borders Los Angeles County, potentially represents the first domino in a series of future measures targeting public employee pensions.

“I guarantee you that when this passes,” Ventura County Supervisor Peter Foy has said, “in 2016 every ’37 Act county will have this on their ballot.” Foy, who was addressing a supervisor’s meeting, is a strong advocate for the county ballot initiative. He also happens to have served as chairman of the state chapter of Americans for Prosperity, the radical corporatist group funded by billionaire David Koch. (Foy, who has in the past denied such a connection with Koch, did not return multiple requests for an interview.)

County employees are generally paid less than their private sector counterparts and have long counted on traditional defined benefit plans as a kind of economic equalizer. The Ventura measure would phase out these retirement plans for anyone hired after July 1, 2015 and throw future retirees’ pensions into the riptides of Wall Street trading. (During the last stock market crash and resulting recession, an estimated $16 trillion in household wealth was lost in America.) Furthermore, new employees would be ineligible for the county’s existing death and disability plan. Although the initiative states a new death and disability plan “shall be established by the Board of Supervisors,” it provides no details about its terms.

“Ending the defined benefit plan is a time-bomb disaster for lower income people,” cautions Steve Bennett, chairman of the Ventura County Board of Supervisors. “It’s very difficult for them to save and they won’t be able to maneuver the 401(k) [system] to appropriately invest their savings,” Bennett told Capital & Main.

Proponents argue that the current system is not financially sustainable and is forcing Ventura County further into debt. Critics, however, say the claims of financial doom are greatly exaggerated and they counter that if the measure is adopted it will be harder to attract and retain good employees, particularly in the area of public safety.

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Virtual Schools: Cyber Pie in the Sky?

11:24 am in Public education by Gary Cohn

Sandy Hellebrand was concerned. She needed to find a school that could educate her son Gabriel, who has autism and was about to enter high school.

Hellebrand thought she had found the perfect solution: She would enroll Gabriel and her two younger children in Sky Mountain Charter School, one of a rapidly-growing number of virtual schools in California and across the country.

After all, she reasoned, the school would provide excellent online instructional materials and instructors to guide Gabriel’s individual needs. Since Sky Mountain is a publicly funded school – although not a traditional brick-and-mortar one – the state of California would pay for her children’s education. And Hellebrand and her husband Rob, a public high school teacher, would receive about $1,800 a year for each of their children to help defray their costs of educating them at home.

“The idea is fantastic,” she says in an interview with Frying Pan News. Hellebrand, who lives in Oak Hills, in the northern high desert of San Bernardino County, ticks off the benefits of virtual schools and the education specialist she knew Sky Mountain would provide for Gabriel: “The resources, the supplies, another brain and another set of eyes. It gives the ability to tailor [an education program] to each kid.”

The only problem was that Sky Mountain never accepted Gabriel.

“We have received your Student’s Enrollment Application, and are honored that you are considering our school for your child’s education,” Sky Mountain wrote the Hellebrands in February 2012. “Unfortunately, we were not able to place your student with an Educational Specialist for the school year.”

Hellebrand says that this was just the latest brush-off Sky Mountain had given her efforts to enroll Gabriel during two years and believes Gabriel’s autism played a role in the school’s decision.

“I feel very disappointed and burned,” Hellebrand says. “It’s a school that takes tax money. If you do that, you need to serve the community. I don’t know how they can pick and choose like that.”

When asked about Hellebrand’s comments, Randy Gaschler, founder and president of Innovative Education Management, which manages Sky Mountain and other virtual schools, said he didn’t have the specifics on her son’s case. Gaschler denies his schools bar students with disabilities.

“We don’t have any sort of policy like that,” Gaschler says. “We have hundreds of special-education students in our schools. We do everything we can do to make sure we are in compliance. We don’t deny any student admissions to our schools because they are a special education student.”

According to the National Education Policy Center, there are 311 full-time virtual schools nationwide with an estimated 200,000 students. Supporters claim online schooling will revolutionize teaching and learning, reducing the cost and increasing the availability of high-quality education. Virtual education has grown rapidly over the past decade to become an integral part of the education reform movement.

It has also emerged as a tool of choice in the bitterly partisan campaign to privatize education. One key player in this campaign has been the American Legislative Exchange Council (ALEC), a corporate-controlled generator of far-right legislation, including Florida’s controversial Stand Your Ground gun law and a 2012 Michigan law that hobbled unions’ ability to collect membership dues. The expansion of virtual schools has been made possible by numerous bills passed by state legislatures across the country and has been fueled partly by ALEC. According to the Center for Media and Democracy, ALEC-crafted legislation promoting virtual schools has been adopted in Tennessee and Florida.

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Slash and Burn: The War Against California Pensions

1:33 pm in Pension by Gary Cohn

Benjamin Gamboa doesn’t know John Arnold, but they are linked by a shared concern over the fate of public-employee pensions in California.

“I’m proud to have a pension,” the 30-year-old Gamboa says. “I believe every American should have a pension.”

The two men live in very different worlds. Gamboa is a research analyst at Crafton Hills College in Yucaipa, California. Arnold is a hedge-fund billionaire from Houston, Texas.

There’s another difference between them: Arnold recently had a representative present at a secret “pension summit” held at a Sacramento hotel, where strategies to limit public employee retirement benefits were discussed; Gamboa, a union member, did not – representatives of labor were specifically not invited.

“Pension reform” has become the latest battle cry in a seemingly endless war that has ostensibly been declared against tax-dollar waste, but whose single-minded purpose has been to slash the job protections and benefits enjoyed by California’s working middle class. Pension-cutting advocates have filled airwaves, websites and op-ed pages with stories about employees retiring in early middle age on six-figure pensions. The reality is that the average state and municipal worker retires on about $26,000 a year.

The Sacramento summit took place May 22 at the Citizen Hotel, a luxury boutique inn two blocks from the state capitol. It was hosted by the Reason Foundation, a Los Angeles-based conservative and libertarian public policy group that embraces privatizing government functions and cutting public employee pensions. The foundation’s most prominent trustee is billionaire businessman David Koch, a longtime advocate of reducing public sector retirement benefits.

The meeting’s agenda – a copy of which was obtained by Frying Pan News — was written in the terse, opaque prose of event planners, but still offers a glimpse into the group’s plans. Among other items, it  lists an hour-long session on “Overcoming Opposition: Anticipating and Addressing Government and Union Opposition.” Perhaps the agenda was even more important for what it did not say: That the attack on public sector pensions may soon be transformed into a state ballot initiative that would change California’s constitution.

The participants in the closed-door meeting were Republicans and Democrats, and included public officials and representatives of numerous foundations and think tanks intent on reducing pensions for public employees.

Among those attending were San Jose Mayor Chuck Reed; former San Diego city councilman Carl DeMaio; Josh McGee, a vice president at the Laura and John Arnold Foundation; Marcia Fritz, president of the California Foundation for Fiscal Responsibility; Dan Pellissier, president of California Pension Reform; Ed Ring, executive director of the California Public Policy Center (CPPC) and editor of UnionWatch.org; Jack Dean, executive director at the Reason Foundation and editor of PensionTsunami.com, and Steven Greenhut, a journalist and author of the book Plunder! How Public Employee Unions Are Raiding Treasuries, Controlling Our Lives and Bankrupting the Nation.

Their gathering received no media coverage, with the exception of a brief mention in a column Greenhut wrote for the San Diego Union-Tribune. Despite the pension-cutting movement’s talk of the cause’s bipartisan pedigree, it seems to rely upon transfusions of money from wealthy rightwing personalities and nonprofits. Apart from the Reason Foundation’s close ties to David Koch, Greenhut’s own online hobby, CalWatchdog, is the creation of the Pacific Research Institute, a libertarian think tank with deep pockets.

Both the Reason Foundation and Pacific Research Institute are allied with the Koch-funded American Legislative Exchange Council (ALEC), which has been writing corporatist model legislation for about 30 years. More locally, however, the nexus for pension-cutting is the Tustin-headquartered California Public Policy Center, a conservative nonprofit led by Ed Ring, who worked to promote the anti-union Proposition 32 last year. CPPC’s advisors include Marcia Fritz and Jack Dean; its president is Mark W. Bucher who helped qualify and pass 2000’s Proposition 22, which effectively banned same-sex marriage in California. (Bucher is also a board member of Family Action, a rightwing Orange County political action committee.) Another CPPC board member, Robert Loewen, also serves as president of the ultraconservative Lincoln Club of Orange County.)

The Sacramento meeting apparently helped set the stage for moves that are now occurring largely behind the scenes.

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