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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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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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