Quantum Windbag
Gold Member
- May 9, 2010
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Pensions are not ironclad in the private sector, why should they be in the public sector?
Big Trouble in Little Hoover - Reason Magazine
If you are part of the growing percentage of Americans who choose to live outside the state of California, you probably havent heard of Little Hoover. But this oversight agency is the closest the Golden State comes to gray eminence. Created in 1962, the commission makes measured and judicious suggestions on the governance of the state. The panels 13 members are chosen by a scrupulous process, described over four pages of the California code, that limits overt partisanship and emphasizes separation of powers. The commissions judgments are generally considered as reliable as a Moffat & Company gold coin. So Little Hoovers February report, Public Pensions for Retirement Security, came as a shock. Even the most far-reaching state governors have focused their plans for reduced pension benefits mostly on new hires. While a few (such as New Jerseys Christie) have imposed later retirement dates, all have stayed within currently accepted legal practice for the ways existing government employees accrue retirement benefits. Broadly speaking, this means the reform proposals are confined to asking current workers to contribute more to their plans, not tampering with final payouts or accrual rates.
Little Hoover, by contrast, concludes that another two-tiered systemin which new hires come in with a less generous retirement packagewill be inadequate. The report argues repeatedly that the state must find a way to pare back existing contracts. The state and local governments need to restructure future, unearned retirement benefits for their employees, it states. The Legislature must pass legislation giving this explicit authority to state and local government agencies. The commission acknowledges that any such law may entail the courts having to revisit prior court decisions.
And where many Republicansincluding Wisconsins Walker and California 2010 gubernatorial nominee Meg Whitmanhave made a point of excluding cops and firefighters from their pension reform plans, Little Hoover states: Public safety pensions cannot be exempted from the discussion because of political inconvenience.
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There is an interesting legal question about whether public-sector pension promises are truly binding. In private-sector work, you are entitled to retirement benefits that have already been accrued but not to future benefits that you may get if you stay in your job. A series of California court decisions has supportedwithout specifically protectingfuture benefit gains for public employees. There actually is not a body of precedent for locking in future accrual rates. The 1978 California Supreme Court decision Betts v. Board of Administration suggests the opposite view, saying, An employees vested contractual pension rights may be modified prior to retirement for the purpose of keeping a pension system flexible.
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Maybe the truth hurts worst when it comes from one of your own. For all its highly praised independence, the Little Hoover Commission is a product of Californias political establishment, not a think tank full of anti-government ideologues. That its recommendations are in fact more radical than the plans proposed by avowed small-government types suggests how large the government employee pension problem isand how unserious are most proposals to fix it.
Big Trouble in Little Hoover - Reason Magazine