Pension Reform Act 2014

New Statewide initiative to reform unsustainable pensions. bellow are the findings and the beginning of the reform act.

SECTION 2. FINDINGS.
(a) Government has a responsibility to provide essential services that protect the
safety, health, welfare, mid quality -of life enjoyed by all Californians.·
Government also has an obligation to be fair to its employees and ensure that its
retirement benefit plans are sustainable, fiscally sound, and able to meet the
commitments made to its employees and retire-es.
(b) The cost of California’s current government employee retirement benefits is
threatening the government’s ability-to achieve these goals. California’s
government reform agency, the Little Hoover Commission, issued a report in
February 2011 entitled “Public Pensions for Retirement Security.” The report
stated, ”California’s pension plans are dangerously underfunded, the result of
overly generous benefit promises, wishful thinking and an unwillingness to plan
prudently. ” The Commission concluded that pension costs are impairing the
government’s ability to provide essential services, and without aggressive reforms,
cities and counties will be forced to slash services, reduce other forms of
compensation, and lay off more government employees. In fact, government
employee retirement benefits are a primary factor behind the bankruptcies of the
cities of Stockton and San Bernardino, and threaten dozens more jurisdictions with
service-level insolvency. And if these problems continue to grow and become
more widespread, government employees will be in peril of not receiving the
retirement benefits they have earned.
(c) The current situation was not foreseen when the State Legislature passed
Senate Bi11400, which granted retroactive pension increases to state employees in
1999. Back then, the California Public Employees Retirement System
(“CalPERS”), the state’s largest pension plan; estimated that state pension costs
would not increase for a decade .. Instead, according to CalPERS, the cumulative
increase in state pension costs topped $16 billion during that decade. In addition,
the Stanford Institute for Economic Policy Research has estimated that unfunded
state and local pension liabilities now exceed $500 billion. These dramatic cost
increases and unfunded liabilities are not simply due to the recession or drops in
the housing and stock market several years ago, but are also attributable to ·
inherent and systemic flaws in the government employee retirement benefits
system. In a report issued in April2013, CalPERS projected that retirement contributions will rise by up to an additional 50 percent during the next seven years, creating a burden-that will prove unbearable for many cities, counties and
other local government agencies. The situation at the California State Teachers’
Retirement System (“CalSTRS”) is much worse. In September 2013, CalSTRS
reported that, under currently accepted Governmental Accounting Standards
Board standards, its pension plan was only 44.7 percent funded.
(d) This voter-sponsored measure is necessary because attempts to reform the
system through legislation and other initiatives have been inadequate. Even though
the Little Hoover commission has confirmed that California cannot solve its
pension problems without making prospective changes going forward for current
employees, the pension reforms passed by the Legislature in 2012 did not include
such necessary changes. In addition, more substantial pension reforms adopted by
local governments are at-risk of being overturned by the courts due to a lack of –
clarity in the law. While private sector pension plans are governed by federal laws
that allow the plan sponsors to prospectively change employee benefits and
provide for specific remedies when-the plans become fnianCially distressed, some
argue that the language in some California judicial decisions hold that the same
standard does not apply to public pensions. Finally, the citizens of California
strongly support pension reform and believe the 2012 state legislation did not fix
the problem.
(e) This measure is fair and reasonable, serves an important public purpose,
restores the integrity and stability of government pension systems, and is
necessary to preserve and protect the safety, health and welfare of the people of
California,