Legislative Update:
Legislature Approves Pension Reforms

The Legislature approved AB 340 (Furutani), a conference committee report to implement the governor's new plan to reform public employee pensions in California, and the governor has indicated that he will sign the bill.

The legislation passed the Senate by a 38-1 vote and cleared the Assembly with a 66-9 vote.

The bill was put together at the last minute, and a number of drafting errors were identified by the public. To address these errors, Assemblywoman Joan Buchanan introduced AB 197 and noted, as the Assembly was voting on AB 340, that her bill would be coming to the house later in the day. Several of her colleagues took issue with the fact that they had not seen AB 340 nor AB 197, and pointed out that the last-minute nature of gut-and-amends leads to poor process.

Before the house voted on the bill, Assemblyman Curt Hagman asked for AB 340 to be placed on suspense indefinitely. He stated that there were many technical issues regarding the bill, and that the policies within the bill needed to be debated in a committee. Mr. Hagman's motion was rejected. He later asked for the governor's original 12-point pension plan – introduced by Republicans earlier in the session – to be voted on, but this motion also was rejected.

Others, however, saw this as an opportunity to address the tip of the pension iceberg. Assemblyman Jim Beall contended that "now's the time to stand up and make the decision" on pension reform. He said that impending pension problems need to be addressed, and added: "Is now the time to defer savings? We need to start the process of pension reform. This is not something to do overnight – it is a problem that will not be solved all at once. Let's take a considerable step."

Noting that lawmakers have been warned about the problems facing pensions, Assemblyman Warren Furutani said in regard to the bill, "You're damned if you don't and you're damned if you do." He noted that the bill won't solve all of the problems, but said that a "small adjustment can get us on the right trajectory."

Assemblyman Sandré Swanson, the lone Democrat to oppose the bill, explained his position: "We have a right to collectively bargain. I do not believe the problems of the state are workers and their pensions. We're on a slippery slope toward losing collective bargaining."

Senator Joel Anderson, the only member of the upper house to vote against the pension changes, was especially critical of the bill, saying it puts cities and counties that "are facing ruin … in handcuffs and shackles them to our system." Senator Anderson represents a district that includes San Diego, which recently passed its own pension reform measure. He said AB 340 contains provisions that would prohibit other cities from taking similar action. "To turn around and allow a city to go bankrupt because we've taken away the tools they need to adequately address their situations is something I cannot support," he said.

Many of the bill's Republican critics said the legislation does not go far enough, and several criticized the secretive process by which the bill was put together and the process used to rush it to the floor without thorough vetting. However, these critics did vote for the bill.

Senator Tom Berryhill quoted Senate President Pro Tem Darrell Steinberg's statements regarding a separate proposal to reform environmental review laws, which Senator Steinberg called too important to rush through at the end of a legislative session. Senator Berryhill said this standard should also have been applied to pension reform. He pointed out that the Republicans introduced SCA 13, which would have enacted the governor's original 12-point pension plan, six months ago. With only days remaining in the session, he said, "The inmates have taken over the asylum in the dead of night."

Senator Roderick Wright called the California public employees' pension system a "Ponzi scheme," and explained that it fits the dictionary definition exactly. Senator Steinberg took offense to these comments and others, and said: "I, for one, am tired of public employees being the sole and unfair focus of so many of the state's problems. People who enter the public service are public servants … (It is) about time we spend more effort honoring the people that choose to go into the public service while at the same time we provide what we can afford."

While the big public employee unions publicly criticized the bill, it appears that they gave tacit approval of the plan, as their representatives were not lobbying vigorously in the final hours to get Democrats to vote against it.

September 7, 2012
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