A possible 2014 ballot initiative to allow the state of California, its cities and other governmental agencies to make changes to the retirement benefits of current employees is being by prepared a group of mostly conservative politicians and policy advocates.
The draft initiative, first reported by Frying Pan News in conjunction with the Huffington Post, would allow changes to be made to the retirement benefits of current employees. Any such changes would be in effect only from the time they are enacted.
The initiative would prohibit the state, the pension system, CalPERS, and governmental boards from "interfering with elected leaders' or voters' ability to amend their public employee pension plans for employee' future years of service."
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Gov. Jerry Brown pushed pension reform through the state legislature last year. Unions who say their collective bargaining rights are being abridged are contesting some of the changes.
Frying Pan reported that San Jose Mayor Chuck Reed, a Democrat, was circulating the ballot initiative to mayors, public officials and others who want to cut public pension benefits. Reed's own tough pension reform law, approved last year, is being challenged in court.
The draft ballot initiative's stated objective is to protect the government's ability to provide essential services to the public and to "maintain retirement plans that are sustainable."
Other public pension systems across the country are facing huge deficits in the funding of future liabilities. From Rhode Island to Detroit, Chicago and Oregon, politicians and unions have been fighting over how to protect retirement benefits while staving off insolvency of the pension funds.
The amount of unfunded future liabilities faced by public pension systems has also been the subject of much debate. New formulas favored by ratings agencies, such as Moody's and Standard & Poor's, take a more conservative approach in looking at investment returns. In addition, the bond ratings of governments are being downgraded in part because of unfunded future pension liabilities.
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