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Friday, March 04, 2005

Pension reform plan draws heated opposition

Governor touts agenda while public safety groups protest
Mark Martin, Patrick Hoge, Lynda Gledhill, Chronicle Staff Writers
Thursday, March 3, 2005

As Gov. Arnold Schwarzenegger visited the Bay Area to gather support for his agenda, his proposal to change the way the state handles public employee pensions was attacked in Sacramento by firefighters, police groups and even President Bush's chief fund-raiser in California.

Schwarzenegger made an afternoon stop in Hayward, where he told a bipartisan crowd of local business people inside a drapery manufacturing plant that lawmakers were spending "addicts'' and outlined three initiatives he is backing for a special election if the Legislature doesn't approve his proposals.

In the Capitol, lawmakers held hearings on two Schwarzenegger ideas: a plan to cap state spending in times of deficit and one that would eliminate guaranteed pension payouts to state employees.

Changing the pension system has been bitterly opposed by labor unions. But a dissenting view came from an unusual voice Wednesday, one with ties to two Schwarzenegger allies.

Gerald Parsky is Bush's leading fund-raiser in California and was appointed to the University of California's board of regents by former GOP Gov. Pete Wilson. Parsky is now the chairman of the board, and told an Assembly committee Wednesday that less-stable pensions could hinder the university system's ability to attract top-notch professors.

Parsky noted that UC faculty are typically paid about 14 percent less than their peers in similar systems, and guaranteed pensions have helped offset that in recruiting.
That could change if pensions are revamped, he said.
"Without a competitive compensation package, we will lose the best available faculty,'' Parsky said.

He noted that UC professors, researchers and doctors provide the state's "intellectual capital,'' which creates technological and business breakthroughs that produce jobs.

"California's economic competitiveness will suffer if we cannot retain the nation's best and brightest,'' he said.

Parsky added, however, that the university was concerned about pension costs and their relation to the stock market and said he thought lawmakers and the governor should work on some form of pension reform.

Schwarzenegger's pension proposal would cap the amount of money the state pays into employee pensions and have future government employees enter into 401(k)-style plans that limit taxpayer responsibility for retirement and put more of the burden on workers to save.
Shifting to a so-called defined contribution system will spare taxpayers that risk and allow employees more flexibility in investing their pensions, supporters argue.

An administration official noted that under the governor's proposal, UC officials who currently manage pensions for employees could continue to do so. Individual employees could simply give authority to UC pension fund managers to manage their individual retirement funds, said H.D. Palmer, spokesman for Schwarzenegger's Department of Finance.

At the same legislative hearing, labor officials and Democratic lawmakers criticized the pension plan, arguing that it could end death and disability benefits to employees like firefighters and California Highway Patrol officers who are injured or killed on the job. The benefits are currently part of pension packages that most employees receive, and would likely become a negotiation topic in collective bargaining if Schwarzenegger's proposal is adopted.

"It's a shoddy way to treat people who give their lives to public service, '' said Carrol Wills, of the firefighters union California Professional Firefighters, after the hearing.

Both Assemblyman Keith Richman, R-Northridge, who is authoring the legislative version of the pension overhaul, and Schwarzenegger's top budget official, Tom Campbell, told lawmakers the reform was not intended to do away with death or disability benefits.

Richman called the issue a "red herring,'' saying those types of benefits would be negotiated between unions and employees.

Schwarzenegger is now engaged on two parallel tracks to try to implement his agenda. While carrying legislation in Sacramento, he is also pushing initiatives in a statewide publicity campaign.

He has endorsed an initiative that would allow judges -- instead of lawmakers -- to draw voting districts. He also is supporting an initiative to make teachers work five years before obtaining tenure and the pension reform.

In Hayward, American Blinds & Draperies Inc. President Paul Russo said he supports Schwarzenegger, a Republican, even though he is a Democrat, because Schwarzenegger is taking decisive action to improve the business climate in the state.

"The politicians were deaf to the message that voters sent with the recall (of Gov. Gray Davis) in 2003,'' Russo said. "The voters want immediate changes.''

Outside Russo's plant, scores of protesters representing nurses, firefighters, teachers and other public employees loudly voiced their opposition to the governor's proposals.

"Those are the special interests,'' Schwarzenegger said inside, calling it unfair that public employees get "gold plated'' pension benefits that are better than what workers can get in the private sector.

Pension ballot language disputed

Summary says measure will cut death benefits; governor says it won't.

By Andy Furillo -- Bee Capitol Bureau
Published 2:15 am PST Friday, March 4, 2005

The state attorney general's ballot summary for Gov. Arnold Schwarzenegger's pension initiative says the proposal will eliminate death and disability benefits for police and public safety workers, a statement that has drawn fire from the proponents of the measure.

The attorney general's spokesman, Nathan Barankin, said Thursday the initiative essentially eliminates the benefits by not specifically including them in the language of the proposed initiative. The measure seeks to replace the current "defined benefit" pension system with a "defined contribution" system for state, local, university and other public employees hired after July 1, 2007.

"When we write a title and summary, we describe in tight word limits what an initiative actually does," Barankin said. "Not what the proponents say it does, and not what the opponents say it doesn't do. And this proposed initiative eliminates for employees hired after (July 1) 2007 the existing pension system and replaces it with a new one."

Schwarzenegger, at a campaign event Thursday in San Diego in which he gathered signatures on petitions to get the pension measure as well as a redistricting change on the ballot, said it will not eliminate the death benefits for public safety employees.

"I can guarantee you that as long as I am governor, there will never be any death benefits or disability benefits taken away from the police officers, from law enforcement, or from firefighters," Schwarzenegger said at a rally broadcast on radio. "It won't happen."

Citizens to Save California, the campaign committee with close ties to Schwarzenegger that is funding the governor's signature-gathering effort, released a statement earlier in the week saying that under the proposed pension change, "public agencies could determine to offer death and/or disability benefits for employees in addition to the defined contribution plan, just as many private employers do today."

Committee board member Jon Coupal, the president of the Howard Jarvis Taxpayers Association, said it is too late in the signature-gathering process for the group to file a suit to change the wording on the summary.

"It would screw up our timing," Coupal said.

Thursday, March 03, 2005

Angelides recruits labor advocates for pension fight

By Rachel Osterman -- Bee Staff Writer
Published 2:15 am PST Thursday, March 3, 2005


LAS VEGAS - Attempting to enlist national labor's support in the fight over public employee pensions, state Treasurer Phil Angelides on Wednesday blasted Gov. Arnold Schwarzenegger's plan to overhaul California's massive retirement program.

"Governor Schwarzenegger is making California a national battlefield with the Bush right-wing agenda," Angelides said immediately following his speech to the AFL-CIO Executive Council.

Angelides, who is planning to run for governor in 2006, said he wants the national labor movement to mobilize against Schwarzenegger's plans, which appear headed for the November ballot in a special election.

Angelides' remarks met with immediate approval from AFL-CIO Secretary-Treasurer Richard L. Trumka, who said the national labor union was committed to fighting Schwarzenegger's proposed overhaul of public employee pensions. Trumka, however, wouldn't specify an amount of money or resources that the federation would dedicate to that effort.

"If in fact they (the Schwarzenegger administration) are able to destroy a public pension plan in California, then, quite frankly, defined-benefit pensions are destroyed," Trumka said.

A spokesman for the governor said shifting from defined-benefit pensions to so-called defined-contribution plans is not the product of "right-wing think tanks."

"The state has seen a dramatic increase in its share of cost for the public employee retirement system," spokesman H.D. Palmer said, adding that employee pension overhaul is necessary to avoid what he called a pension crisis.

Also Wednesday, an even more visible split emerged among national union leaders who are meeting here to try to revitalize the AFL-CIO.

The leaders of five unions who want the AFL-CIO to return 50 percent of dues to unions for organizing efforts lost a vote on their proposal Wednesday. At a press conference, they vowed to take their fight to the AFL-CIO's national convention in July, where they expected to have more support.

"A massive focus on organizing ... is the only path for rebuilding worker power," said Teamsters President James Hoffa, who spoke alongside the heads of the United Food and Commercial Workers Union, the Service Employees International Union, the Laborers' International Union, and UNITE HERE, which represents textile, hotel and restaurant workers.

"Our central proposal to return a portion of the AFL-CIO per-capita dues is a positive mechanism to stimulate change," Hoffa added.

SEIU President Andrew Stern, who has threatened to quit the AFL-CIO if significant organizing reforms aren't enacted, indicated he is staying with the national movement - at least for now.

"We're now in the middle of an enormously important discussion that ends in the convention," Stern said. "What I want to do, and what I think we all want to do, is restore the strength of workers in our country."

Later in the afternoon, Trumka said labor remains united around such key principles as better jobs and fighting Social Security privatization.

"You have to have political action, and you have to have organizing," he said. "You can't simply organize out of this problem."

After labor lost its all-out effort to unseat President Bush, and as the proportion of American workers represented by unions has plummeted from over 30 percent in the 1950s to just over 12 percent in 2004, union leaders have been locked in a contentious and soul-searching debate about how to restore workers' power.

Two camps have emerged in Las Vegas: those that wish to put more of the federation's budget into organizing new members, and those who want to see the AFL-CIO dedicate more funds to political and legislative activities, in hopes that political pressure will create a better climate for organizing.

Wednesday's vote took place in the AFL-CIO's executive committee, a group of about 20 union leaders that makes recommendations to the 54-member executive council.

The executive committee voted down the Teamsters proposal but supported a rival proposal from AFL-CIO John J. Sweeney to dedicate half of per capita dues to political and legislative mobilization. Sweeney's proposal would also convert an AFL-CIO program that gives about $12 million in grants for organizing into a rebate formula that's slightly larger, according to a Sweeney spokeswoman.

Art Pulaski, head of the California Labor Federation, said that even as national unions continue to disagree over reform, local affiliates in California will keep working together.
"Everybody in California is still together, and they're committed to staying together," he said.

Thursday, February 24, 2005

Pension fund still defining its role

By Adriel Hampton
Staff Writer S.F. Examiner
Published: Wednesday, February 23, 2005 10:53 AM PST


Over 70 years, California's Public Employee Retirement System has transformed its pension protection mandate into an activist role in corporate America and grown into a quasi-legislative giant that offers home loans, funds affordable housing projects and can sway economies of developing countries.

Over the past 20 years, while its assets increased sixfold to $182 billion, CalPERS has operated in the worlds of finance and politics, pulling investment from South Africa in protest of apartheid and crafting a complex corporate governance strategy.

"They are more powerful than the Assembly as far as money," said James McRitchie, a corporate governance activist and CalPERS watchdog.

Today, the nation's largest pension fund is playing a rare defensive role, struggling to control rising pension costs and provide an alternative to Gov. Arnold Schwarzenegger's new benefit reform plan.

"We feel that CalPERS is doing an efficient job overall," said Bill Duclus, director of legislation for a public retiree group with about 3,500 members.

While it does boast of its corporate reform efforts, CalPERS is also an innovator in the health care sector. Its 1.2 million health plan enrollees make CalPERS the third-largest health care buyer in the nation.

CalPERS' recent efforts to drive down health costs have included shutting high-priced hospitals out of its network and it's currently pushing pay-for-performance standards for hospitals and considering high-tech innovations that would help chronically ill people avoid costly emergency room visits and hospital stays.

The system has been under much public scrutiny in the past two years. During the tenure of past-president Sean Harrigan, CalPERS took activism to a new level, voting against directors at 2,700 companies and attacking Safeway management during a labor conflict with Harrigan's own union. The system will cost taxpayers $2.4 billion this year.

The U.S. Chamber of Commerce and other business groups criticized CalPERS, pointing out the broad influence of union politics on the board's decisions and financial ties between the board and the firms it invests in.

CalPERS' actions are "proof positive that a board that has complete autonomy with no checks and balances doesn't always look after the shareholders or in this case the retiree's best interests," said David Hirschmann, senior vice president of the U.S. Chamber of Commerce.

Now Schwarzenegger has complained about a lack of negotiation by CalPERS once he announced his reform proposal during the State of the State address last month.

Calpers at a glance

Founded: 1932

Assets: $182 billion

Employees: 1,688

Administrative costs: $250 million for 2005

Mission: Advance the financial and health security for all participants

20-YEAR INVESTMENT RETURN: 10.5 percent

Health program: HMO and preferred provider options for 1.2 million members; spends $3.8 billion annually on health benefits and provides a range of plans.

Average retirement benefit: $1,752 a month after 19 years of service

Board members: 13 members -- six elected, three appointed, four designated by statute.

Pension ballot in limbo until next week

Analyst says new plan could save $1B annually.

By Adriel Hampton
Staff Writer S.F. Examiner
Published: Wednesday, February 23, 2005 10:53 AM PST


Proponents of Gov. Arnold Schwarzenegger's pension reform initiative hoped to begin gathering signatures today, but the President's Day holiday and a new report from the state has delayed the Secretary of State's final version of the measure until Monday.
"
It looks like we are going to have to wait until the 28th," said Daniel Pellissier, chief of staff for Assemblyman Keith Richman, R-Northridge. Richman's office drafted the original reform plan and the Howard Jarvis Taxpayers Association submitted it to the Attorney General early last month under the name "The Fair and Fiscally Responsible Public Employee Retirement Act."

The plan, adopted by Schwarzenegger in his State of the State Address, would mandate that starting in 2007 all new state employees would pay into a 401(k)-style retirement plan. Current workers and retirees would continue to get the existing pension based on their income at retirement.

Campaigns on both sides of the issue are awaiting official ballot language to begin educating voters. Based on the release of the measure late this month, proponents will have just seven weeks to collect the nearly 600,000 valid voter signatures needed to qualify for a special election in November.

Ironically, an alternative plan filed by the faculty association at the University of California, Los Angeles, is identical to the Schwarzenegger plan except that it exempts UC employees. Official ballot language for that plan will not be released until early April, leaving about two weeks for signature gathering.

According to an analysis of the plan by the nonpartisan Legislative Analyst, Elizabeth Hill, government savings under the proposal could "be in the hundreds of millions of dollars to over $1 billion annually." The state is liable for $2.36 billion of retirees' pensions this year, and Hill's report said the state and local governments have historically paid "in the low billions" for retirement benefits.

The California Public Employees Retirement System, the nation's largest public pension fund, billed the state just 4 percent of payroll for most employees in 2001 based on strong investment returns in the late '90s. The rate increased this year to 17 percent of payroll based on enhanced retirement benefits and CalPERS' investment losses during the dot-com bust.

Richman and the Legislative Analyst expect transition costs for the new plan. The report says those fiscal impacts are unknown and depend on how retirement boards and employees reacted to the plan if it were enacted.

Release of the ballot language for Schwarzenegger's plan coincides with a March 1 timeline he has set for the Legislature to provide a compromise. The governor recently compared his effort to last year's compromise on workers compensation reform, when the Legislature acted after signatures were collected.

Unusual alliances take sides in pension debate

High stakes for money, investment, fund managers.
By Adriel Hampton
Staff Writer S.F. Examiner
Published: Tuesday, February 22, 2005 12:01 PM PST

The fate of public employee pensions is likely to be a centerpiece of an expensive ballot initiative to remake California government.

Gov. Arnold Schwarzenegger plans to raise $50 million for the pension and several other initiatives planned for a November special election. The governor has already begun a series of fund raisers expected to last through the spring.

Schwarzenegger's ballot plan, to be revealed in detail today, would require all new state employees to enroll in a 401(k)-style retirement plan instead of a traditional, guaranteed pension plan.

He's not alone in planning for a big-money race.

Labor unions are planning to spend their own money and to enlist friends in the financial industry to resist Schwarzenegger's plan to cap pension benefits and open up the retirement system to private competition.

The state's public pension funds, led by the California Public Employees Retirement System, the California State Teachers Retirement System, the University of California and those run by Los Angeles and San Francisco, manage about half a trillion dollars in assets.

Those assets create huge stakes for financial firms that already get pension business, as well as those that would like to compete.

"If this becomes an initiative ... I'm sure we will be raising money from all interested parties which will include employers or management people who don't want to move in this direction as well as friendly industry folks," said Dave Low, volunteer chair of the Pension Protection Coalition, a group of unions and other interests formed to keep Schwarzenegger's pension plan from the ballot. "There are a lot of financial interests that don't want this to move forward."

Public pensions are legally barred from directly opposing the ballot initiative.

Many past Schwarzenegger donors -- both corporate and private -- declined to comment on whether they would support his current initiatives.

National tax reformers are also making California pension reform a key issue. Allan Zaremberg, president of the California Chamber of Commerce and the lead fund-raiser for the pro-Schwarzenegger group Citizens to Save California, said large pension funds like CalPERS have made a case for reform by pushing for increased employee benefits that drain taxpayers' pockets.

CalPERS' investment committee chair, Chuck Valdes, has suggested that firms doing business with the system contribute against Schwarzenegger's effort.

CalPERS already invests billions with politically active fund managers, many who have contributed to either Schwarzenegger or to pension board members Controller Steve Westly and Treasurer Phil Angelides in the past.

Union and public employee pension funds also invest billions in private accounts, and Low said his coalition would be quick to advise members to avoid any mutual fund companies that support Schwarzenegger's effort.

Some financiers may stay clear of financial donations to either side due to perceived conflicts.

Gerry Langeler, a partner in OVP Venture Partners, Kirkland, Wash., said venture capital fund managers are likely to make their opinions known whether they give money or not. CalPERS has a $5 million stake in one of OVP's funds.

"We will voice our opinion and I think it's an informed opinion," Langeler said.

Pension board has been under fire

By Adriel Hampton
Staff Writer S.F. Examiner
Published: Tuesday, February 22, 2005 12:01 PM PST

The effort to reform California public pension systems comes as CalPERS, the nation's largest public fund, has been under fire from some business groups critical of what they see as a union-driven departure from sound investment decisions.

The CalPERS board at its last meeting elected union activist Rob Feckner as president. He follows Sean Harrigan, a union leader who some board members felt put the pension system into too many losing battles.

As an investor in many companies, the CalPERS board for decades has felt it should use the retirement fund's position to compel public companies toward its most up-to-date definition of good citizenship.

"CalPERS has been a national leader in effective corporate governance for 25 years, OK. Respected throughout the country," said CalPERS board member Controller Steve Westly at a retreat last month. "The last two years we lost our focus. We took on too many issues, we lost on to many issues and we lost our leadership position."

Allan Zaremberg, head of the California Chamber of Commerce and co-chair of Citizens to Save California, a pro-Gov. Arnold Schwarzenegger fund raising group, said CalPERS involvement in the recent Southern California grocers strike was inappropriate and showed the system sometimes strays from the bottom line in its advocacy.

While CalPERS most often runs into criticism when it pushes social agendas, it also uses its clout as a major shareholder on financial issues like linking CEO pay to company performance.

CalPERS board members say Harrigan, an official with the grocery industry United Food and Commercial Workers union, created an apparent conflict, but most of the board was concerned with the management of Safeway's chief Steven Burd.

Ron Alvarado, the State Personnel Board member who took Harrigan's seat on the CalPERS board, denied Harrigan was targeted for removal due to his activist role. Alvarado said he was sensitive to concerns CalPERS was losing its focus on fiduciary duty. "Perception can be reality," Alvarado said.

The personnel board ousted Harrigan in December.

Feckner, who like Westly did not criticize Harrigan directly, said he plans to delegate more leadership and play a less prominent role than his predecessor.

Westly's reference to the board taking on "too many issues" include votes against corporate board members on 85 percent of its proxies last year. CalPERS' negative votes were focused on issues such as companies hiring their auditors as consultants. Among its targets was Coca Cola board member Warren Buffet, the well-known chairman of Berkshire Hathaway Inc.

The vote against Buffet, along with its influence during the grocery workers' dispute, drew criticisms from business interests and partisan critics. That ire is already transferring into support for Gov. Arnold Schwarzenegger's reform plan, despite assertions from the governor's staff that CalPERS is not a target.

"I think they should focus on ensuring a good rate of return for the state of California" rather than social activism, Zaremberg of the state chamber said. "That should be their No. 1 goal."

The high political stakes of CalPERS actions -- former Vice President Al Gore recently praised the system for its efforts to force auto makers to reduce emissions -- often take precedent over fiscal concerns, some charge.

"If they were engaged in real corporate governance the chamber would cheer," said David Hirschmann, vice president of the National Chamber Foundation. "When they use corporate governance to further any special interest agenda or advance anyone's political career, we think that's a mistake."

Targeting large pay packages for CEOs is among the system's top goals this year.

"Who else is out there talking about corporate governance?" said Alberto Torrico, D-Newark. "The federal government has no interest in taking on corporations."

At the CalPERS retreat, Kevin Cameron, president of the analytical firm Glass, Lewis & Co., which advises CalPERS and other large shareholders how to vote their proxies for corporate boards, told board members that institutional shareholders are the only force countering "remorseless upwards pressure" in CEO pay, a trend he said threatens long-term value in companies. Public pensions have increasingly been joined by large stockholders like the Vanguard Group in questioning corporate directors in an effort to see better returns.

When CalPERS moves into social advocacy, board members say its efforts are driven largely by the interests of the system's members -- union government workers. In December, the board voted on a policy against investing in companies that provide contract employees for government work.

Working in concert with companies is also a goal of some board members. At a recent board retreat, Jeffrey Amann, general counsel for the business software firm Siebel Systems suggested that CalPERS and its professional staff should focus on playing an advisory role -- one that would lead more companies to value its input. Siebel this year launched a performance-based bonus system for all its employees.

Retirement nationally

Ninety percent of state and local government employees participate in defined benefit -- or guaranteed -- retirement plans

California's more than 2 million public pension members account for about 12 percent of the nation's total and all have defined benefit, guaranteed retirement plans with supplementary 401(k)-style plans as an option

10 states -- Texas, Washington, Ohio, South Carolina, Florida, Montana, Nebraska, Oregon, Colorado and Indiana -- offer employees plan options

Michigan, West Virginia and the District of Colombia have limited defined benefit plans to new employees, offering a 401(k)-style defined contribution plans instead

Differences

Here are the key differences between the existing California public employees defined benefit plan and Gov. Arnold Schwarzenegger's defined contribution proposal:
- Defined contribution (proposed)

RISK: Employees bear market risks, reap gains

TRANSFER: Plans can include immediate vesting

RECRUITMENT: Plans may be popular with workers who foresee short careers with the state

COST: Retirement savings depend on individual choice; employees who invest wisely will earn more than a defined benefit plan; government employer could lower matching contributions
- Defined benefit (existing)

RISK: Benefit to employee cannot be changed and taxpayers pick up the difference if government investments fall short

PORTABILITY: Short-term workers may get back only what they paid into system

RECRUITMENT: Plans reward long-term service. A switch to new defined contribution plans may hurt employer efforts to recruit workers who have the old plan with another government agency

COST: Overall benefits are cheaper to deliver due to fewer plan choices; government can use early retirements to save on payroll costs and encourage turnover

State pensions 'ground zero' in reform fight

Schwarzenegger plan focuses on cost-cutting.

By Adriel Hampton
Staff Writer - S.F. Examiner
Published: Tuesday, February 22, 2005 12:01 PM PST


California voters are about to get a crash course on the public pension system, courtesy of a retirement reform ballot proposal due out today.

Taxpayer and business groups that support Gov. Arnold Schwarznegger's plan to cap retirement benefits for government workers plan to immediately crank up a signature-gathering campaign. Pollsters on both sides of the debate will begin questioning voters on their opinions.

Schwarzenegger's initiative would mandate that beginning in 2007 all new state employees would pay into a "defined contribution" or 401(k)-style retirement plan. The state would no longer allow new workers to participate in the current "defined benefit" system that guarantees workers a pension based on their income at retirement.

The new plan would also cap the annual benefits that state and local governments can pay employees to between 6 percent and 12 percent of pay.
The governor says his plan is the best way to control escalating pension costs.

Opponents of the plan, such as state Treasurer Phil Angelides, have criticized potential new costs.
A nonpartisan analysis of the initiative's costs is expected to be released today.

Assemblyman Keith Richman, R-Northridge, a treasurer candidate who crafted the proposal before Schwarzenegger picked up the cause in his State of the State address last month, said the transition to the new plans will cost more initially than the current system but is the best way he can think of to ensure long-term savings.

Public pensions are "overly generous now," said Richman. "It's too easy for politicians to put the costs off into the future."

Angelides, Democratic legislators, unions and corporate reform advocates have attacked the plan as a back door to break up the California Public Employees Retirement System.

CalPERS is a $182 billion fund for 1.4 million current and retired non-teaching state employees and workers in 2,500 local government agencies. It is the nation's largest public pension fund.

CalPERS lost $38 billion in the in the dot-com bust but has since recouped those losses.

However, after enjoying a near holiday on retirement costs during the market boom of the late '90s, CalPERS now cannot pay $2.36 billion of next year's pension costs and must get the money from taxpayers.

CalPERS board joined unions in approving rich benefits in 1999 when a new law gave public safety workers 90 percent of retirement pay after 30 years of service and lowered the general retirement age to 55 and allowed newer employees top-tier benefits. State employees do pay 5 percent of their salary into the system.

Cost to taxpayers

Sen. Roy Ashburn, R-Bakersfield, sits on the Senate retirement committee and hopes to work with Schwarzenegger on a less-sweeping reform. But he praised the governor for tackling the public retirement system, which he said has been stretched beyond capacity.

"The cost to taxpayers is inexplicable," Ashburn said.

Legislators have proposed alternatives to the Schwarzenegger plan that include a hybrid between the proposed and current plan types, an attempt to smooth out the range of annual taxpayer contributions and stopping employees from abusing disability retirement or spiking their retirement pay through excessive overtime in final years of service.

"We're going to fix the system, not 'blow it up,' " said Assemblyman Alberto Torrico, D-Newark, who chairs the assembly's committee on retirement benefits. "We're talking about commonsense reforms that save money."

Schwarzenegger and Richman both have bills -- ACA 5 and AXA1 -- nearly identical to the initiative measure, but have so far failed to come to agreement with Democrats who control the Legislature.

If the Legislature can't move past "excuses, complaints and finger-pointing" to agree on a compromise plan for the ballot, Schwarzenegger said, he'll take his message directly to the voters.

The proposal has drawn inevitable comparisons to President Bush's Social Security agenda and set battle lines in the retirement debate raging throughout the nation.

Public retirement officials throughout the nation are closely watching the California initiative. Several smaller states have changed their retirement plans in recent years.

"California is ground zero in the most difficult issue facing this community," Keith Brainard, director of research for the National Association of State Retirement Administrators, recently told the 13-member CalPERS board.

NASRA favors California's traditional retirement system, as does a majority of the CalPERS board.

Unlike Bush's Social Security plan, pension reform in California would not take money away from the government and put it in the private market. CalPERS and the state's other large pension funds already practice aggressive private investment and some retirement experts say passage of the Schwarzenegger initiative is unlikely to change CalPERS investment strategy or institutional strength.

The word "privatization" has been used consistently to describe the plan, but even some opponents admit privately that CalPERS and other public pension funds are likely to retain control of their assets.

Ballot plan

The ballot plan -- for which proponents need nearly 600,000 valid voter signatures by April -- would not affect current and retired public employees.

The system and its Democratic-leaning board of directors are known for an aggressive campaign to force corporate accountability. Those efforts sometimes spill over into environmental activism and protection of the system's union beneficiaries, such as a December policy against investing in businesses that contract for government work, such as doing laundry for public hospitals, or providing meals for public schools.

CalPERS critics have also adopted the Schwarzenegger plan as a way to reduce public pensions' market reform efforts.

Assemblyman Richman says the intent of his bill is not to undermine public pensions.

CalPERS manages a diverse portfolio of bonds, stocks and private investments for an average fee of 0.25 percent, a cost matched only by the cheapest private mutual funds, and sees a long-term return of more than 10.5 percent.

Controller Steve Westly, a member of the CalPERS board who has supported the governor's fiscal reforms in the past, said he understands the governor's motives even though he doesn't agree this time.

"I think it's incumbent on us to not just say no, but [instead] to acknowledge there is a problem here and we need to make sure that CalPERS is not saddling state government with big bills," Westly said.

A state switch to 401(k)-style plans would follow a private sector trend away from costly guaranteed lifetime pensions, according to retirement experts.

Robert Monks, principle of the corporate-governance law firm LENS Governance Advisors and a former Reagan appointee who favors the traditional pension, said taxpayers are likely to support reform since they are paying for a benefit that is becoming rare in private business.

Reform proposal

Any public employees hired July 1, 2007 or later would enroll only in a defined contribution 401(k)-style retirement plan

From July 1, 2007, to Jan. 1, 2008, employees could transfer their existing plan assets into the new plan

Most employees could get a maximum government employer contribution of 6 percent but would have to also contribute 3 percent to qualify for the full benefit; employees without Social Security and public safety workers could get up to 9 percent and safety officers not covered by Social Security could get up to 12 percent

Local governments could exceed the percentage limits only with a two-thirds vote of their electorate

Field Poll: Most initiatives urged by governor have slim leads

By Gary Delsohn -- Bee Capitol Bureau
Published 2:15 am PST Thursday, February 24, 2005


A slim majority of registered voters supports most of Gov. Arnold Schwarzenegger's "reform" proposals, according to a poll released Wednesday, but two-thirds oppose spending millions of dollars for a special election.

The latest statewide Field Poll shows what pollster Mark DiCamillo called "lukewarm" early support for Schwarzenegger's proposed initiatives, with the exception of merit pay for teachers, which drew support from 60 percent in the survey.

Schwarzenegger has said that unless the Legislature approves his proposals for merit pay, spending controls, a pension system overhaul, and a new way to draw legislative and congressional districts, he'll take the proposals directly to voters in a special election this fall.

"Except for the merit pay proposal, I'd characterize the support for the governor's proposals at this time as lukewarm," DiCamillo said. "With initiatives, the 'yes' side is usually hoping for higher numbers early on.

"So I'd say these are vulnerable proposals, especially with well-funded campaigns to oppose him, which I expect those will be. But I don't want to dismiss the strength of Arnold Schwarzenegger. He has surprised pollsters in the past, so we'll have to wait and see."

The results come one day after another Field Poll showed Schwarzenegger's approval rating had dropped from 65 percent to 55 percent over the past five months.

Registered voters, by a margin of 51 percent to 45 percent, said they approve of Schwarzenegger's plans for a special election "if the Legislature fails to act on his reform proposals."

The support is turned on its head, however, when voters are told the election could cost between $50 million and $70 million. Only 30 percent said they thought it was a good idea once they were told the potential costs.

At a campaign-style event at Cal Expo on Wednesday, Schwarzenegger said those costs were well worth it.

"The taxpayers despise the fact that billions and billions of dollars were spent in California by the legislators - by the big spenders - without asking them," he said.

"Of course, we'll have a special election that maybe cost a little bit of money, but nothing in comparison to the amount of money that was wasted. That's what the people are upset about. Not ... $60 million or whatever the amount for (an) extra election. You can't even compare the two. OK?"

His defense of the election costs came at an elaborately staged event designed to sell his budget-control proposal.

Just as he used phony bags of money loaded onto armored trucks to pitch his pension proposal in San Diego two weeks ago, Schwarzenegger created a made-for-television moment at Cal Expo.

Standing before a large replica of the California Capitol left over from the State Fair, Schwarzenegger grimaced as he appeared to struggle with a giant spigot flowing with what the governor's staff said was water dyed red to symbolize California's budget deficit.

As aides backstage flipped an electrical switch that stopped the "red ink," Schwarzenegger called for passage of his proposal to enact across-the-board budget cuts when state spending exceeds revenues.

Schwarzenegger said he didn't use taxpayer funds for any of the costs associated with the event, relying instead on campaign contributions.

Democrats have highlighted the election cost in their criticism of Schwarzenegger's plans, and Dave Jones, a Democratic assemblyman from Sacramento, was outside the Cal Expo event to comment.

"Californians are increasingly troubled by the governor's partisanship and stridency as we try to work together to solve our budget problem ...," Jones said. "Standing in front of a fountain and turning it on and off doesn't help."

Bonnie Hinojas, a 68-year-old Democrat and retired beauty shop owner from Fresno who responded to the poll, said she likes the idea of a special election as a "grand gesture to try and fix things."

But the cost of a special election, she said, "makes no sense when we don't have enough money to pay for things now. Something has to be done, but I'd say wait until it doesn't cost that much. I do think he's trying to do a good job, and I know it's a hard job."

On the spending plan the Republican governor chose to highlight Wednesday, the poll found 51 percent of registered voters now favor that idea, with 42 percent opposed and 7 percent having no opinion.

On merit pay, poll respondents were asked whether they support the proposal to "tie increases in the salaries of public school teachers to their classroom performance rather than to their years of service."

Sixty percent of registered voters said they favor the idea; 36 percent said they're against it.
"
The concept there seems very intuitively appealing to voters," DiCamillo said. "You should be paid for your performance. I think that's a common idea in most workplaces, but the problem in selling that will be in the details. How exactly are you going to institute merit pay? So we'll know more when we have those details."

According to the poll, nearly half of all registered voters - 48 percent - favor Schwarzenegger's proposal to have a panel of retired judges, instead of sitting legislators, draw election districts for Congress and the state Legislature.

And on Schwarzenegger's proposal to overhaul the pension system for new public employees, 51 percent of all registered voters said it's a good idea.

Schwarzenegger's now-abandoned plan to consolidate many state boards and commissions into "fewer but larger agencies" was favored by voters, 53 percent to 37 percent.

The telephone poll was conducted from Feb. 8-17, using a sample of 506 adults, including 404 registered voters.
The poll has a margin of error of plus or minus 4.5 percentage points.

Wednesday, February 23, 2005

Courts stand guard on pension promises

Any changes can't hurt current state workers, judges have ruled.

By John Hill -- Bee Capitol Bureau
Published 2:15 am PST Monday, February 7, 2005

California has repeatedly given new and improved retirement benefits to public employees.
The question now has become what, if anything, it can take back.

While the state has wide latitude in scaling back pension benefits for new workers, experts say, it faces far stricter limitations when it comes to current employees.

Even some of the measures proposed by Gov. Arnold Schwarzenegger, which stop short of altering the basic pension formula in favor of steps such as encouraging workers to leave the retirement system, could trigger a legal challenge.

California case law makes it clear that any changes to the pension system that undermine its fiscal soundness amount to the state reneging on its promise to provide for public employees' retirement.

"The minute you become employed, you're making a deal with the state," said John Adkisson, a lawyer who represented the California Public Employees' Retirement System in a landmark 1997 case.

Assemblyman Keith Richman, R-Northridge, got the message when the legislative counsel told him a pension bill he had written could be challenged as unconstitutional if it applied to current workers.

Richman's bill would require state and local pensions to be based on a three-year salary average, instead of the one-year formula used by the state and many local agencies - a move that would reduce retirement benefits.

Richman is going ahead nonetheless, reasoning that his bill may become a test case. "Even something as sensible as moving to a three-year averaging is very difficult if not impossible to do," he said.

Schwarzenegger ignited the debate by declaring in his State of the State address last month that revamping pensions would be one of four goals in the coming year.

The Republican governor endorsed an initiative sponsored by Richman and the Howard Jarvis Taxpayers Association banning traditional pensions for government and school employees hired after July 2007. Instead, they would get "defined contribution" investment accounts similar to the 401(k) that could be transferred between workplaces but would not guarantee a level of post-retirement income.

The budget proposal Schwarzenegger released last month called for significant changes to the existing pension system.

Workers now pay a fixed percentage of their salaries for pensions. The state makes up the difference needed to keep the retirement fund whole. The state portion has varied wildly - increasing by 1,600 percent in the past five years from historic lows.

Schwarzenegger wants employees who remain in the traditional pension plan to pay for half that fluctuating rate instead of the fixed contribution. In the coming fiscal year, his proposal would mean that a rank-and-file state worker would have to contribute 11 percent of pay - 6 percentage points more than under current law.

The governor takes it one step further. He wants to give state workers the option of leaving the retirement system altogether. To entice them, Schwarzenegger is proposing that workers who opt out be rewarded with a "stipend" equal to half the amount the state would normally have paid to CalPERS on their behalf.

The administration wants to phase in these changes as contracts are negotiated with state worker unions. Fourteen of 21 contracts have already expired or will by the end of this year.

Courts have long since made it clear that governments cannot take away basic pension benefits of current workers. In 1955, for instance, the California Supreme Court ruled that the city of Long Beach could not change some of the basic rules of its retirement system, such as the method of computing benefits.

Changes can be made, the courts have said. But if they result in a financial disadvantage to current workers, they must be accompanied by "comparable new advantages."
Underlying these decisions are the contracts clauses of state and federal constitutions, which declare that contracts made by government cannot be "impaired" by laws or other measures.

The Schwarzenegger administration is making no attempt to change the basic pension formula, which is based on a percentage of salary multiplied by the years of service.

But what if CalPERS actuaries were to declare that moving workers out of the traditional system, as Schwarzenegger advocates, would undermine the soundness of the retirement fund for those left dependent on it?

In 1997, the state Supreme Court sided with CalPERS when it sued to block Gov. Pete Wilson from delaying payments to the retirement system. Even though Wilson had not changed the basic pension formula, his attempt to divert money from the retirement fund amounted to a breach of the state's contract with its workers, the court found.

The same argument has already been made about Schwarzenegger's proposal. J.J. Jelincic, president of the California State Employees Association, said he has been told by actuaries that curtailing the number of people in CalPERS could weaken the system.

CalPERS might argue, for instance, that having a smaller overall fund reduces its leverage in the financial markets and diminishes investment returns, said Adkisson, who argued the Wilson case for CalPERS but is no longer representing it.

But Schwarzenegger's Department of Finance says it has seen no evidence of such an effect. On the contrary, some have argued that the proposals will strengthen the system, administration officials say.

Any changes will have a much greater chance of surviving legal challenge, Adkisson said, if they are endorsed by the CalPERS board. He said a 1992 initiative gave CalPERS vast authority over the workings of the retirement system - powers that have never really been tested in court.

"Legally and politically, it's better to get the board to go along," Adkisson said.
But the administration isn't seeking the retirement system's approval.

"I'm not aware of anything that would require CalPERS to sign off," said Bob Campbell, chief counsel for the Department of Finance.

CalPERS would not comment on the legal questions raised by Schwarzenegger's proposals, saying it does not address "hypothetical situations." But the retirement system has made it clear that it doesn't like the idea of switching to defined-contribution accounts for new workers.

Given the unlikelihood that CalPERS will go along with Schwarzenegger, Adkisson said, "it sets up this sort of inevitable fight in the courts."

Thursday, February 17, 2005

CalPERS Board Votes to Oppose Defined Contribution Legislation

SACRAMENTO, Calif.--(BUSINESS WIRE)--Feb. 16, 2005--The CalPERS Board of Administration voted 9-3 to oppose legislation that calls for a Constitutional Amendment that would shift public pensions from a defined benefit plan to a 401(k)-style defined contribution plan for new employees.

ACA 5 and ACA 1X would amend the California Constitution to prohibit any newly hired public employees from enrolling in a defined benefit public pension plan beginning July 1, 2007. If either bill passed, it would require voter approval during the next Statewide election.

The Board accepted the recommendation of the Benefits and Program Administration Committee which yesterday listened to a staff analysis, heard from the Director of the Department of Finance, and received comments from numerous representatives of employee and retiree groups.

"The abundance of evidence suggests this legislative proposal to move to a defined contribution plan is not well thought out," said Rob Feckner, President of CalPERS. "It is our fiduciary duty to oppose this legislation because it harms the retirement security of future members and because long term it will hurt our ability to invest assets appropriately."

A defined benefit guarantees a specific pension amount to the employee. The benefit is determined according to a calculation based on the employee's salary, years of service and age at retirement. Under such a plan, the employee is entitled to the promised specific benefit. The money used to finance the pension comes from contributions by the employer, employee, and investment returns.

Under the defined contribution proposal, or DC plan, the employer contributes a fixed amount alongside of employee contributions. At retirement, the employee has an account balance based on how much has been put into the fund and how these contributions have grown over time as they have been invested.

Kurato Shimada, Chair of the Benefits Program and Administration Committee, said the System recognizes the plight of employers in meeting their financial obligations to fund pensions, but there is no need to throw the baby out with the bathwater. "We will continue to work with our employer community to find the best way of stabilizing contributions. A Constitutional Amendment is not necessary to solve this problem," he added.

CalPERS is the nation's largest public pension fund with assets of more than $182.9 billion. The System provides retirement and health benefits to 1.4 million State and local public employees and their families. For more information on CalPERS, visit www.calpers.ca.gov.

OP-ED - 02/15/05

OP-ED - 02/15/05
from Public Employee Department - Laborers' International Union of N.A.

Watch out when a politician promises to fix a problem, save taxpayer dollars, and give you a better deal all at the same time.

That’s exactly what Assemblyman Keith Richman’s new pension scheme is promising…and it’s a risk we can’t afford.

Currently, public employees – including teachers, firefighters, police officers, district attorneys, sheriffs and other state workers – are guaranteed to receive a secure pension based on the years of service they have put in and their salary history. They can also contribute to a 401(k) plan if they choose. The Richman plans takes away that choice -- leaving them with only a risky, stock-market-based 401(k) plan.

Under this measure, employees could lose their entire retirement savings in risky investments. In the end, taxpayers might be forced to bail them out. It would even prohibit school districts, cities and counties from offering traditional pension plans to employees who do not receive Social Security, like teachers, police officers and firefighters.

How is that a good idea?

Hard working Californians shouldn’t have to roll the dice and bet on the stock market to provide for security in their old age.

But wait, it gets worse. The measure would also strip away death and disability benefits for California’s police and firefighters.

Talk about risk.

These are the people who put their lives on the line everyday providing safety for all of us.

Keith Richman’s plan would eliminate the survivor benefits of police and firefighters -- killed in the line of duty -- replacing them with the same 401(k)-style plan that everyone else would get under his scheme.

That means that the wife and children of a 27-year-old police officer killed in the line of duty would not receive one dime in continuing death benefits – and they would have to get by on whatever the officer had managed to save in his 401(k) plan during the five or so years they had been on the job.

That’s just wrong.

So why is Keith Richman doing this? And who is really behind it?

This measure is being backed by Wall Street brokers who will reap billions of dollars in profits from privatizing pensions. The same brokers who are backing the Bush Social Security Privatization Plan. Right now they are collecting millions of dollars to push this measure because they are the new “beneficiaries” who will be able to charge fees and commissions to manage hundreds of thousands of these new private 401(k)-style investment accounts.

This isn’t about pension reform, it's about putting main street’s hardworking cops and firefighters at risk because those on Wall Street want to make more money.

And speaking of money, under this plan the state won’t save a dime!

According to experts (California’s respected CalPERS and CalSTRS) this plan would cost 7.9 Billion dollars more than the current system over the next ten years.

California’s current pension system offers a secure, guaranteed retirement to hard-working teachers, police officers and firefighters who educate our kids and put their lives on the line to protect us.

Keith Richman’s plan takes away those fair and hard-earned retirement benefits.

That’s a risk we can’t afford.

TALKING POINTS - THE PENSION PRIVATIZATION GAMBLE

THE PENSION PRIVATIZATION GAMBLE
from Public Employee Department - Laborers' International Union of N.A.

This measure eliminates a secure pension for millions of Californians and ends death benefits for the survivors of police and firefighters

· Current public employees get a guaranteed pension and have the choice to contribute to a 401(k) plan. This measure makes it illegal to provide traditional pensions to new employees, leaving them with only risky 401(k) style plans.

· This measure prohibits traditional pension plans even for teachers, firefighters, police officers and all others who currently don’t receive Social Security benefits.

· And this measure strips away death and disability retirement benefits to police and firefighters who are injured or die in the line of duty.

This scheme is a risky gamble for California’s workers, and for taxpayers who won’t save a dime

· The average 401(k) investment lost 40 percent in the recent stock market crash. This plan would force public employees to roll the dice and gamble their retirement on the ups and downs of the stock market.

· Employees who manage their own retirement investments earn as little as one-half the returns that professionally managed pension funds. Employees could lose their entire retirement savings in risky investments and then taxpayers end up picking up the cost.

· The gamble doesn’t stop there. According to CalPERS and CalSTRS this measure will increase state costs for retirement by $7.6 billion over the next ten years.

· And that is just the beginning: Every single city, county or school district with a pension plan will be forced to pay huge start-up costs for the new plan and then will have to pay the costs to manage and run two separate retirement plans.

This measure picks the pockets of California taxpayers to line the pockets of brokers on Wall Street in New York!

· The same Wall Street brokers backing the Bush Social Security privatization plan are backing this scheme, because they will reap billions of dollars in profits from privatizing pensions.

· Public employees could end up paying fees and commissions to manage thousands of risky private investment accounts, while losing both the Social Security and public pension safety nets.

Thursday, February 03, 2005

New way to calculate pensions sought

Lawmaker: Only California uses one year of salary as base
By John Hill -- Bee Capitol Bureau
Published 2:15 am PST Thursday, February 3, 2005


In an effort to halt end-of-career pension spiking, a Republican assemblyman is proposing that California join the other 49 states in the way it calculates public employees' pensions.

A bill submitted Wednesday by Assemblyman Keith Richman, R-Northridge, would base state and local pensions on the final three years of salary, instead of just the highest year.


"It's wrong for California to be the one state in the nation that bases its pensions on the last year of salary," Richman said. "This is a common-sense solution that guards against spiking."

A Bee report in December described how California's 1990 switch to the one-year formula opened the door to workers landing end-of-career promotions that resulted in much higher pensions. At the time the bill was passed, the estimated cost was $63 million - a figure that The Bee calculated has risen to at least $100 million.

Richman wants to make the bill apply to all state and local members of the California Public Employees' Retirement System who retire after Jan. 1, 2006 - not just new hires but current workers as well. He's pursuing the broadly worded bill despite a warning from the legislative counsel that including current workers might be unconstitutional.

"This may end up being a test case," Richman said.

Pensions for state and local governments are based on formulas that multiply a percentage of salary for each year of employment by the employee's final salary. Most rank-and-file state workers, for instance, are eligible at age 55 to receive 2 percent of their final salary for each year they worked.

Key to this formula is what constitutes the final salary. States that use an average of three or more years smooth out the effects of end-of-career pay boosts, while California's one-year formula does not.

Two recent surveys of the nation's largest public pension systems found that California alone uses one year.

The 1990 law setting the one-year provision was part of a deal that allowed budget-writers to garner other savings - at least on paper - from the retirement system. Changing the formula to the highest single year of salary was a way to compensate public employee unions for the savings, which required accounting changes that could weaken the retirement system.

Now, with growing pension costs burdening state and local budgets, lawmakers of both parties are looking for ways to reduce the system's costs.

At the same time, Gov. Arnold Schwarzenegger has endorsed an initiative proposed by Richman and the Howard Jarvis Taxpayers Association to scrap the traditional pension system for new public employees, offering them 401(k)-style investment accounts instead.

Assemblyman Alberto Torrico, D-Newark, said he welcomed proposals such as Richman's, as long as they stop short of ditching traditional pensions altogether. Torrico is chairman of the Assembly's public pensions committee.

Torrico is so concerned about the last-minute spiking, he said, that he plans to introduce his own bill to end the practice. He said the details of his proposal still are being worked out.

Richman's bill, Torrico said, is "a hopeful signal from Republicans that they are trying to fix the pension system and not dismantle it." So far, however, neither Richman nor Schwarzenegger has backed away from efforts to amend the state constitution to do away with traditional pensions, either.

J.J. Jelincic, president of the California State Employees Association, said applying it to current workers would be "on shaky ground" legally.

The importance to public employees of the one-year provision depends on how quickly public sector pay is growing, Jelincic said. In recent times, at least at the state level, pay raises have been infrequent, leaving the three-year average pay for most workers about the same as the one-year formula.

But if the state returns to a more typical era of regular pay increases, "it becomes more important," Jelincic said -with the one-year formula leading to bigger pensions.

In either scenario, a few workers manage to get promotions shortly before retirement. And it is that group that could be most affected by Richman's bill.

"For an individual getting a career-ending promotion," Jelincic said, Richman's proposed change is "a big deal."

Friday, January 28, 2005

Pension revamp bills exploding

The governor's bid to scrap the system has legislators hurriedly trying to fix it.

By John Hill -- Bee Capitol Bureau
Published 2:15 am PST Friday, January 28, 2005


Under threat of an initiative to scrap California's traditional public pensions, legislators and others are scrambling to craft bills to repair the system instead.

Gov. Arnold Schwarzenegger has endorsed the initiative to replace public pensions, which guarantee retirement income based on salary and years of service, with 401(k)-style investment accounts.

Strong interests - especially public employee unions and their allies - oppose abandoning the existing system. Now, they're under the gun to fix it.

In the recent past, proposals to rein in pension costs haven't gained much traction. This year, however, the initiative threat is leading to a bumper crop of proposed changes - many of them focusing on medical pensions, where abuses documented in The Bee have sparked public outrage.

Among the possible bills is one that would reduce workers' compensation benefits to public employees already receiving disability pensions in amounts approaching their pre-retirement salaries. Another would raise the standard for establishing that an injury is work-related.
A third would allow the California Public Employees' Retirement System to demand that pensioners past retirement age submit to medical exams to show that they are still disabled.
Still other proposals are in more embryonic stages.

Sen. Jackie Speier, D-Hillsborough, said the interest in change has grown as state and local governments have been socked with higher pension costs. But Speier maintains relief can come without dismantling the traditional system.

"It can be fixed," she said.

Speier had scheduled a hearing this week in response to a report in The Bee in September about "Chief's Disease," the name rank-and-file California Highway Patrol officers give to abuses of the medical pension and workers' compensation systems in the CHP's upper ranks.

But Speier postponed the hearing until March, she said, mostly so that the various reform proposals could gel and then all be considered at once.

Speier dismissed the initiative backed by Schwarzenegger as likely to enrich investment firms at the expense of workers.

"There are some important areas we need to reform," she said, "And I would be right in line to want to do that. But I'm not interested in rewarding Wall Street."

But Assemblyman Keith Richman, R-Northridge, said none of the proposals he's heard about offers a true alternative to the initiative.

"Most of that is nipping around the edges," Richman said.

Richman and the Howard Jarvis Taxpayers Association are sponsoring the initiative, even as Richman asks the Legislature to use its own power to put it on the ballot. In essence, that plan would transfer the risk of investing for retirement from the government to the worker, stabilizing the public costs. It would apply to state, local and school employees hired after July 2007.

They point out that the costs of pensions have created a crunch not just for the state, but also for some local governments, leading to large-scale borrowing and cutting into the budgets for public safety, social welfare, parks and other services.

One approach favored by those who would like to preserve the current system is to "smooth" the fiscal impacts on government employers.

Currently, each year CalPERS tells its state and local government members how much they must contribute to keep the system fiscally sound.

That contribution can fluctuate wildly. In recent years, because of the sudden drop in investment returns and improvements to pension benefits, governments have gone from paying next to nothing to being on the hook for high costs.

This boom-or-bust cycle could be avoided with a requirement that governments contribute a similar amount each year.

Richman puts that alternative in the category of "nibbling around the edges."

"That's a fiscally prudent requirement," he said. "But that's not anywhere near enough."

Some of the proposals are coming from the very parties that are reeling from pension costs - the local governments and retirement systems.

Those officials say they are wary of jettisoning traditional pensions, long a key ingredient of local government employment.

"What can we do to reform the system without gutting it?" asked Jim Lites, a lobbyist for the State Association of County Retirement Systems, which is working on the bill to strengthen the standard for showing an injury was caused by the job.

For local officials, who want immediate savings, the worst case would be if the public debate devolved into a fight over whether to end the traditional system, said Steve Keil, legislative coordinator for the California State Association of Counties.

"We have a lot of informed people who want to be able to deal with this issue in a constructive way," Keil said.

The overhaul proposals under discussion rival, even exceed, the workers' compensation overhaul that occupied the Legislature and governor last year, said Sen. Roy Ashburn, R-Bakersfield, the vice chair of the committee that deals with the pension system. Ashburn, in fact, is working on a pension overhaul of his own, though he said details were still being worked out.

Considering the proliferation of proposals, Ashburn said, delaying the legislative hearing was a good idea.

"A quick fix is not necessarily a good fix," he said.