Initiative would cut UC employees’ pension benefits

Employees of the University of California and other public institutions could see their pension benefits cut as soon as 2015 under a ballot initiative that was proposed last week.

The Pension Reform Act of 2014, which Californians could vote on in November of next year if it is approved for the ballot, would change the state constitution to allow the UC and other state and city employers to reduce how much employees earn in retirement benefits.

Past court decisions prevent California public employers, such as the UC, from reducing the amount allocated for employee pensions.

The proposal does not limit how much employers would be allowed to cut from retirement benefits. The act would not affect benefits employees have already earned.

Five city officials, including San Jose Mayor Chuck Reed, are proposing theact because of rising costs of public employers’ pension plans. Pension plans in the state are, as a whole, underfunded by billions of dollars. The act aims to reduce these shortfalls by decreasing the amount employers have to pay to their employees when they retire.

“Pension costs are impairing the government’s ability to provide essential services,” the proposed initiative states. “California cannot solve its pension problems without making prospective changes going forward for current employees.”

The UC’s retirees health and pension benefits are currently underfunded by $21 billion according to The Future of UC Retirement Benefits website, an amount UC officials anticipate will grow to $40 billion in five years.

UC officials expect pension costs to be one of the University’s biggest expenses.

The UC has already increased pension contribution amounts for both itself and its employees. The changes spurred protests from multiple UC worker unions, some of which also oppose the newly proposed pension reform act.

“(The) proposal is rooted in a misguided belief that public agencies must break the promises made to … public servants in order to cover for the mismanagement of their bosses,” said Todd Stenhouse, spokesman for the American Federation of State, County and Municipal Employees Local 3299 union, which represents UC workers. “This ill-conceived ballot proposal should be called the Robin Hood in Reverse Act.”

Chris Tilly, director of UCLA’s Institute for Research on Labor and Employment, said he was concerned that if the measure were to pass, public employers like the UC would have more trouble recruiting competitive employees, who would know their pension benefits could be cut.

“Nobody should have no idea what their pension’s going to be,” Tilly said. “Everyone should have some sense of what they can plan for in retirement.”

The University declined to comment because it typically does not comment on proposed ballot measures, said UC spokeswoman Dianne Klein.

Experts predict the measure would unleash a storm of campaign fundraising on both sides of the long-controversial issue of pension reform.

Archie Kleingartner, founding dean of the UCLA School of Public Policy and Social Research said he thinks the measure, if approved for the ballot, would have a good chance of passing because many Californians have the perception that public employees already enjoy “rich” pension arrangements compared to private employees.

Initiatives like the Pension Reform Act that aim to amend the constitution need 807,615 signatures from California voters to qualify for the ballot. Proposed initiatives must receive approval by June 26, 2014 to be placed on the official ballot.