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.

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.