[Contra Costa County] Oakland Tribune editorial: Grand Jury pension reform proposal could serve as a model for struggling government agencies

Increasing tax revenues won't cover rapidly rising costs of public employee pensions, the Contra Costa Grand Jury warns in a report challenging county leaders and government workers to negotiate a solution.

Questioning conventional legal wisdom, the grand jury suggests the two sides could and should agree to reduce -- not eliminate, but reasonably reduce -- the rate of future benefit accruals for current workers. The move could save the county more than $1.5 billion over the next 18 years.

Union leaders shouldn't reflexively dismiss the idea before considering jobs that could be saved, salaries that could be increased and potential cost-savings for employees. And before county lawyers again reject the legal basis of the proposal they should carefully study the grand jury's well-reasoned arguments.

The plan could serve as a model for governments throughout California struggling to make required pension contributions. Agencies in the California Public Employees' Retirement System face increases of 35 percent to 50 percent by the end of the decade as the nation's largest pension plan corrects for past underfunding.

Meanwhile, at the Contra Costa County Employees' Retirement Association, the accounting has been more realistic. But that means the county and 16 other local government agencies, and often their workers, already struggle to make huge payments.

The grand jury proposes "a sensible and fair path forward to pension reform." That would be distinguishable from the supposed reform Gov. Jerry Brown jammed through the Legislature in 2012.

Most of Brown's changes affected only new employees, meaning savings will be small for decades. As the non-partisan watchdog California Little Hoover Commission warned, meaningful reform requires addressing pension costs for existing workers.

The grand jury does not propose reducing benefits workers have already earned; it advocates trimming the rate at which they accrue pension benefits for future labor. Specifically, it suggests reducing that rate for employees hired before 2013 to the same level the Legislature and Brown approved for new workers.

Union and county attorneys argue that pension accrual rates cannot be reduced for public employees without each one's consent. But, the grand jury notes, the key California Supreme Court decisions on this issue were written more than a half century ago when pension benefits were much lower, Proposition 13 didn't restrict tax revenues, life spans were shorter and retirements occurred later in life.

Most significantly, the cases pre-date collective bargaining in California for public employees and arose from government attempts to unilaterally impose pension changes. That's very different from the grand jury suggestion that county and labor leaders negotiate consensual reductions to save future jobs and salaries.

It's time to give it a try.

June 18, 2015

Bay Area News Group