The compromise hammered out between Gov. Jerry Brown and Democratic leaders of the state Legislature appears to be "pension reform lite." But it's hard to know for sure.
Three days before the Legislature's deadline to vote on the plan, the governor's news release announcing the grand deal lacked details needed to evaluate it intelligently. It was merely a skeletal outline of a supposed strategy to fix one of the state's most complex financial problems.
On Friday, legislators will vote on the complex bills that include the details. Most lawmakers will have no idea what's in them. It's an abhorrent way to conduct business, especially when purporting to solve such a critical issue.
That said, if the plan contains the details the administration claims, it would be an improvement over the status quo. But it would fall short of decisively fixing the system. The savings are impossible to determine because lawmakers plan to bypass the review such major legislation should be subjected to.
Clearly, meaningful change is essential: State taxpayers are already on the hook for a pension debt of, conservatively, $257 billion. That works out to an average $20,700 for each household in the state. The soaring cost has helped drive many local governments to the financial edge, and a few into bankruptcy.
Brown put out a 12-point plan last fall that provided a promising minimum starting point for talks. But realizing those changes proved
Brown last year put forward a major proposal, to split the first part of the payment evenly between employers and employees. Currently, in most cases, especially for police and firefighters, employers pay a much larger share, in some cases all of it.
As a result, taxpayers bear a disproportionate burden and workers have little incentive to look for cost savings. After all, they're not paying most of the bill.
The compromise plan released Tuesday imposes the 50/50 split for new employees and, over the next two years, for current state employees. But at the local level, the change will be subject to collective bargaining. Only after five years will local elected officials have the ability to impose it if labor unions balk.
CalPERS, the nation's largest system, uses accounting gimmicks that rely on overly optimistic investment forecasts, push current costs onto future generations and hide the true magnitude of the shortfall. As a result, for example, CalPERS has yet to set contribution rates that account for most of the investment losses from the Great Recession.
It's legalized fraud -- and Brown knows it. He called last fall for more independence and expertise on public pension system boards. Yet, the compromise deal announced Tuesday contains no such provisions. State Finance Director Ana Matosantos said that would have required going to the voters, so those changes could not be included.
Matosantos understands the issues. Brown should have brought her out to explain the legislation. Instead, the administration and Legislature did a horrible job unveiling it Tuesday. Talking to legislators, they were as much in the dark as the rest of us.
Senate leader Darrell Steinberg promises the package will provide "tens of billions of dollars" of savings over the next 20 to 30 years. How he figures that, we have no idea. We're supposed to trust him.
But when it comes to pension legislation, we've learned that lawmakers can't be trusted. That's why this plan should have been subjected to sunshine and independent analysis. It won't be.