Gray Davis lauds Schwarzenegger, calls for pension reform

[Freddie Stubbs]

Source: LA Times

Former Gov. Gray Davis said reforms advocated by Gov. Arnold Schwarzenegger will make it easier for whomever holds the job next, and he praised Schwarzenegger for pushing for changes in the state pension system -- changes that Davis said were now inevitable.

"With ... the open primary and redistricting reform, at least 20% of the Legislature will have its interests properly aligned, and they will be punished if they don't solve big problems," he said. "Right now, the Legislature is punished if they do solve big problems. But help is on the way for the next governor."

Davis also said the financial assumptions that led to him signing massive increases in state worker pensions were wrong and should be undone.

"The evidence seemed to suggest the state was wealthy enough to afford it," he said. "It was part ideology and part math, and the point is the math was wrong, big-time.

Read more: http://latimesblogs.latimes.com/california-politics/2010/08/gray-davis-lauds-schwarzenegger-calls-for-pension-reform.html?utm_source=twitterfeed&utm_medium=twitter

[bluestateguy]

1. The problem I have is with the salaries of the prison guards

A bunch of overpaid thugs.

[Kolesar]

2. Where is the "counter prison" lobby?

I suppose that the Bar Association and enlightened judges lobby against the prison lobby's demands for more prison sentences.

[bluestateguy]

3. The prison lobby opposed reducing the sentencing disparities b/w crack and cocaine

Like the FOP for example, in spite of such "liberals" as David Keene, Grover Norquist and Tom Coburn supporting the bill.

[mike_c]

4. let's be clear about those "extravagant pensions...."

I'm a California state employee and I'll receive a pension from PERS when I retire (assuming it's still there, of course). I'm close enough to retirement to have begun thinking about it, and most important, I've begun looking into what my pension will be. The short version is that if I jump through some fairly specific hoops, stay on for at least another seven years AND have the Faculty Early Retirement Program (FERP) to help out with the first five years or so of retirement-- until my SS kicks in-- I'll be able to retire with a pension equal to roughly half my current salary, as well as being able to keep my medical insurance until I qualify for Medicare. That's half of a reasonable salary that has NEVER left me much wiggle room for savings, and has been effectively flat for the last ten years or so.

Let's look at what that means. First, it means that I'll be homeless, or pretty close to it. I will not be able to afford to continue renting the house I've lived in for the last decade or so, not on half my income, despite its being an excellent bargain. I'll have some choices, of course-- that's the saving grace of at least having a pension-- including moving to a small apartment, or leaving the country for someplace less expensive, or being homeless. Most of my other living expenses won't go down even though my income will, so something has to give, and food, housing, and medical costs are my biggest expenses. My SO and I are talking about taking homelessness onto the road for a few years-- one person's living out of the back of their car is another person's "golden years"-- so we'll eventually be headed to central or south america via the public lands in the U.S. southwest.

Unless the laws regarding student loan debt change between now and then, paying my debt payments will deplete more than half of my pension, so we'll actually be living on a quarter or so of my current income. And my partner won't get anything, other than social security after she reaches 66+, so we'll both be living on significantly less than that quarter of my current income.

And someone wants me to believe that's an "extravagant pension," that it's "massive?" We are literally researching how to be homeless and still live reasonably safely when we retire, and ultimately how to do it in a third world country because we'll be able to extend our choices somewhat-- extravagance is not a concept that applies, IMO.

Still, I do understand how fortunate I'll be to have even that if it's still there in seven or eight years. But anyone who suggests that we'll be living high off the labor of others is delusional, IMO.

[Imajika]

7. What difference does it make if the state can't afford it?

You can argue forever about how generous or not generous your pension is, but the bottom line is the state simply can't afford it. Whether you think your pension is generous really doesn't make much difference.

Here we have Gray Davis saying exactly the same thing as Arnold is saying about these pensions. How much more clear can this be:

"The evidence seemed to suggest the state was wealthy enough to afford it," he said. "It was part ideology and part math, and the point is the math was wrong, big-time. Pension reform is essential. You just can't afford the benefits that have been promised because all the actuarial studies turned out to be wildly optimistic," he said. "We have no choice now, and if I was governor, I would be doing exactly what Arnold is trying to do, which is require people to contribute more to their pensions."

I really just don't get what people seem to be unable to understand. What about California being utterly broke is not getting through to people?

It almost just seems like there is some sort of weird mental block many people have here about public worker benefits.

There is just no money left. Worse yet, private sector workers are largely paying for these benefits - and private sector workers are generally faring even worse right now. Why do public sector employees refuse to see this?

[mike_c]

9. dammit, the bastards made promises that were reciprocal...

...and it is their responsibility to live up to their promises if I hold up my end of the bargain, i.e. if I perform 25+ years of service helping to prop up the economic future of California by educating its citizens.

Pensions aren't free gifts. They're part of an exchange of labor for compensation, in essence deferring part of the compensation I've EARNED until the end of my life so that I can spend those last years doing something OTHER than working. What I'm hearing from the state is that deferring that compensation simply gives the state additional opportunities to renege on its obligations. Again, it's important for people to understand that my pension is part of the deal I made with the state when I accepted their offer of employment. State employment is not slavery. We exchange our labor for compensation, and my deal with the state included compensation invested by PERS while I'm working and paid to me after I retire.

The PERS people say they have no difficulty affording pensions for current and incoming retirees who have paid into the system (or whose compensation has been invested for them by the state). Instead, the state seeks to change the deal without negotiation for a whole bunch of reasons, but affordability of current pensions really doesn't have anything to do with them, at least not according to PERS.

Future affordability is another matter, but rather than attack workers' benefits, the state should do whatever is necessary to insure it can meet its obligations, whether that's increasing taxes on wealthy businesses-- who benefit directly from the services state workers and educators provide-- or calling for employers and employees to increase retirement contributions. Breaking its promise is NOT the way to balance its budget on the backs of betrayed workers.

[Imajika]

12. I agree...

Promises and contractual agreements were made with public workers. Every public worker that lived up to their end of the deal has a right to every dime of money/benefits/pensions that were promised them.

It isn't like I am arguing otherwise.

What I am trying to point out is that the state is now broke. The money is gone. The private sector is seriously hurting, and an awful lot of those people are furious at government for making these deals with public sector unions and public sector employees. Gray Davis is now saying he should never have increased public employee benefits. He is saying the projections he relied on to offer these packages were way too optimistic.

So what now? Some people have been saying all along that the packages offered to public employees were too generous, and it may have turned out to be true (at least if you believe anything Gray Davis has to say). So what is the answer? The state is broke. These financial benefits/pensions offered to public workers are paid by tax dollars (collected mostly from the private sector), and if those people refuse to pony up? If they elect representatives that will break those contractual agreements? You realize that a lot of people, instead of stepping up and taking responsibility for voting in representatives who negotiated these unaffordable packages, will simply chose to find ways not to honor the deals they made with public workers.

I really just don't think people fully realize what is happening.

What do you think will happen to these pensions if the state goes bankrupt? If that happens, most contracts are voided. Do you think if California just can't pay its bills anymore that somehow state workers are going to collect their full pensions?

If a majority of tax payers simply won't pay for public sector benefit packages and make this clear by voting for representatives that refuse to allocate money to fund the pensions in full, who are you going to be mad at and what difference will that make?

[mike_c]

16. I think you misunderstand how PERS pensions are paid....

The money is not supplied by state revenue or by "current workers"-- it's paid to PERS as part of our compensation package, and PERS invests the money for future payout during retirement. PERS says they are entirely healthy and that they have plenty of money to meet their current pension obligations. The state might be broke, but PERS isn't, and THAT'S where the money comes from for pension payments, not from the state coffers.

What the state might have a genuine interest in doing is reducing overall compensation for state workers by cutting FUTURE pension benefits (and current compensation payments into the system), but existing workers have already paid into the system and PERS says they are completely solvent. Calling such cuts "pension reduction" is a smoke screen, since current pensions are fully funded and what they would really be cutting is current state worker compensation by cutting employer contributions into the pension fund for FUTURE pensions.

[SomeGuyInEagan]

10. "Worse yet, private sector workers are largely paying for these benefits" Bullshit!

These are negotiated benefits - in many instances, employees took salaries below private market levels in trade for the benefits such as decent healthcare and pension. To state otherwise is simply incorrect.

Yes, the state may be out of money. That is not the fault of those thousands of state employees who negotiated in good faith and showed up everyday to do *THEIR* job. The "leaders" of the state - and country - need to get creative and find a way to both jump start the economy and deal with their obligations. If both do not occur, we are in a hell of a lot more trouble than we realize.

[Imajika]

11. How is what I said BS?

"These are negotiated benefits - in many instances, employees took salaries below private market levels in trade for the benefits such as decent healthcare and pension. To state otherwise is simply incorrect."

Yes, I agree 100%. I don't disagree at all with your point. How does that make what I say BS? Who pays the vast majority of EVERY dollar in salary and benefits a public worker earns? That's right, the private sector. No matter how much a public worker sacrificed in salary to get a decent pension, the private sector is still the group primarily paying the bill.

I didn't say it was fair, but it is what it is. It's like this just isn't getting through to people somehow. The private sector is on the hook for all the deals government made with public sector unions and public sector employees. Do you think the average private sector worker actually feels like they had any hand in negotiating these deals? No, they don't. They actually did though because they elected the government who provided these benefits and pensions, but life isn't fair. Don't think for a minute the private sector won't just renege on these promised benefits.

[SomeGuyInEagan]

15. Because the employees - and taxpayers - already paid for these benefits upfront

In taking negotiating, the money that would have gone toward better pay was diverted toward the benefits upfront. Or should have been. So, you're right, probably not BS because I doubt that happened. Sorry.

Close the loopholes, step up the income taxes to fair levels (i.e. so that they are truly progressive) while also renegotiating the prison contracts and the state would return to a well-educated (once the best public higher ed model in the world), well-served (good roads, garbage is picked up, communities are policed and protected against fire, proper safety social safety net, etc.), nice place to live where businesses want to operate because they know they will have qualified, innovative and productive people to employ.

In my current state (Minnesota), state income taxes have been regressive since about 1990. The top earners used to pay about the same (just over 10 %) on income, now about 8 %. Change that to an even playing field or to a truly progressive tax and much of our deficit goes away. Same in true in most states and on a national level as well (and this does affect my family - yes, we would pay more if there were fair rates in Minnesota and if there was a more progressive rate nationally as we are in the upper 20%). But this is an emergency for this country. I had the dumb luck to be born here, got a great free k-12 education, got to go to a good public university for a cheap price (in the '80s), don't have to worry about getting attacked by a another country or getting sick from drinking the water and have decent (but not great) roads.

Once we lose the basics that a society has to offer - police and fire protection, good education (k-12 and higher), decent road systems, reliable energy, clean water, etc.), the rest cave in quickly. And we have learned that little of that can be trusted to the private sector, at least not without strict regulation.

Rant off.

[Yupster]

14. It sounds like you're planning to live just on your pension

After 25 years, you should also have a 403 (b) which should be pretty darn big by now. That should be a significant help to you too.

[cosmicone]

5. I know prison guards getting $100K pa in pensions

after working just 20 years with an average salary less than that.

[mike_c]

6. if that's in california it's because "public safety" employees have a special deal...

...with PERS that the overwhelming majority of us do not benefit from-- and THAT is the result of intense lobbying and political patronage between the governor's office, prison guard unions, and PERS. It simply doesn't translate into "extravagant pensions" for most of us California state workers. I mean, when you've worked all your life and have to decide where to be homeless in retirement, you're NOT getting an extravagant deal. You're just not.

[pipoman]

8. Are there really only 3 people in CA who are qualified to be Governator?

While I don't hate Jerry Brown...how about some new blood? Of coarse I don't have a dog in the fight, just an outsider looking in.

[David__77]

13. Oh fuck you Gray Davis!

Tax the rich and close the corporate loopholes! Cut the prison population and we will be fine.

[Throd]

17. Really?

You should run for governor.