Associated Press: “Highlights of California’s Pension History”

From the Associated Press story via the Fresno Bee, “Highlights of California’s pension history”:

Gov. Jerry Brown has made pension reform a top priority this year as he asks state lawmakers for sweeping repairs on a system widely seen as unsustainable, broken and abused. But many of the problems with the current public pension shortfall go back decades. Here’s a look back at some decisions that have shaped California public pensions:


– 1913: State establishes the California State Teachers’ Retirement System, or CalSTRS.


– 1932: State establishes the California Public Employees’ Retirement System, or CalPERS.


– 1977: Gov. Jerry Brown signs SB839 by Sen. Ralph Dills extending collective bargaining rights to state employees.


– 1992: California voters pass Proposition 162, giving the CalPERS board complete authority over investments and administration. Reform supporters say it shifted the pension’s allegiance from elected officials and taxpayers to public employees and retirees. Labor leaders who campaigned for it said the change was needed to stop then-Gov. Pete Wilson, a Republican, and lawmakers from tapping the fund for a state deficit.


– 1999: Democratic Gov. Gray Davis and lawmakers from both parties approved SB400, giving state workers enhanced benefits on the assumption that the cost – around $600 million a year – would be covered by investment gains.


SB400 paved the way for public safety employees to retire as early as age 50 with 3 percent of their highest annual salary multiplied by the number of years they served. CalPERS and labor unions including the California State Employees Association and California School Employees Association sponsored it.


The “3 percent at 50” formula enabled highway patrol officers, firefighters and prison guards to receive up to 90 percent of their pay for the rest of their life with health care benefits. Civil state workers could retire at age 55 with 2 percent of annual pay, up to 2.5 percent at 63.


– 2009-10: Republican Gov. Arnold Schwarzenegger proposes to roll back SB400’s enhanced retirement package and reduce benefits for new employees by raising the retirement age.


Labor initially resists and Democrats in the Legislature block his proposals but as he nears the end of his second term, Schwarzenegger scores victories through collective bargaining agreements with several state employee unions, including highway patrol officers and firefighters. New public safety employees now must work until age 55 rather than 50 to receive full retirement benefits and employees must contribute more toward their retirement benefits.


– 2011: Democratic Gov. Jerry Brown completes contract negotiations with all remaining state employee unions, requiring workers to pay a greater share of their pension cost.


In October, Brown proposes a 12-point pension plan that would raise the retirement age to 67 for new employees who are not public safety workers and require state and local employees to pay more toward their retirement and health care. He is seeking to place future retirees into a “hybrid” system that blends pensions with a 401(k)-style plan. He seeks to end so-called pension “spiking” that lets employees boost their payouts by including overtime and other benefits, and end the practice of buying additional service credits.


– 2012: In a challenge to labor-friendly Democrats, Republicans embrace the governor’s plan by putting his proposal into a package of bills. Democrats counter with a proposal to create a state-run pension program for an estimated 6.7 million private-sector employees.


Source: CalPERS, CalSTRS, Associated Press.

Skip to content