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Labor's Edge: Views from the California Labor Movement

Career Politician Teams Up With Enron Billionaire to Gut Californians’ Retirement

by Steve Smith, California Labor Federation

It’s official. San Jose Mayor Chuck Reed, a career politician with backing from a Texas billionaire and former Enron trader, has filed a ballot measure to strip away retirement security from current teachers, firefighters, sanitation workers and other public servants.

According to the Sacramento Bee:

"The Pension Reform Act of 2014" would alter California's constitution to allow state and local government employers to cut pensions for current workers.

Essentially, this means politicians would have the power to unilaterally slash the retirement of current workers, breaking a promise made to those workers when they were hired. Many of those public workers affected don’t receive Social Security. They have a modest pension that averages around $26,000 per year. They’re not responsible for the financial mess created by the Wall St. collapse, yet politicians like Reed are all too quick to scapegoat them -- and out-of-state billionaires like former Enron executive John Arnold are all too happy to exploit them for profit.

This initiative isn’t about giving cities "flexibility," as Reed and his cronies contend. It’s about blaming the teachers who inspire and motivate our children for a mess that politicians and Wall Street hedge fund managers created. Reed’s flawed initiative won’t bring fiscal stability to troubled cities, but it would drive a lot of talented, dedicated people away from serving our communities. And it unfairly breaks a promise to current workers who often have no other source of retirement. 

Reed’s ploy, though, is likely to wither when held up to the light of public scrutiny. Californians don’t like out-of-state special interests like Arnold setting policy for us, nor do we appreciate career politicians with their own agendas pushing flawed proposals.

Californians for Retirement Security Chair Dave Low:

Californians have constantly shown their distaste for measures put on the ballot by Texas interests and secret out-of-state contributors, and we expect this flawed proposal to be no different.

This attack on workers must be beaten back. We simply can’t allow opportunists like Reed and billionaires like Arnold to gut the retirement of California workers. Stay tuned to Labor's Edge for more developments and ways to get involved.

Posted on 10/15/2013Permalink

More posts by Steve Smith

Reader Discussion

Well, it seems like we need to protect the under-paid and under-appreciated from the amoral and greedy once again. You just can’t let a pig eat your garden, for you’ll all starve. Get these pigs out of office for even considering the breach of faith and trust guaranteed as the only compensation for an embarrassingly low wage, especially considering the vast and strenuous training and testing to qualify for the job. Little crooked Enron boys like Arnold and his zombie Reed need counseling for an egregious case of depravity that turns them into moneyholics, with the disease’s direct side effects being the loss of all sense of decency and humanity.

at 6:47 pm on Tue, Oct 15, 2013Posted by Clyde Hodge

We in Silicon Valley value the contribution of the teachers, firefighters, librarians, policemen and all of the county employees to make the place unique in the world through innovation in creating enormous wealth. Indeed Silicon valley is the envy of the entire world. The contribution of the entrepreneurs and technology workers has made the valley teeming with wealth.

The public servants had a huge role in the development of each and every one of techie and the entrepreneur.

We need to reward the public servant with a guaranteed pension in the old age and not scheme with the shallow and selfish billionaires to strip away their retirement.

What do we get in keeping the pension promises to these folks?

We will harness their wisdom, skills and experience in shaping the next generation.

A mark of any civilization is how well we care for the young and old.

Granted we have challenges in keeping the promises we made to these servants at the time of hiring.

These promises are achievable in we focus on the revenue side of the equation to attract new businesses, appealing to the entrepreneurs and tech workers to tackle this problem.

Let’s get the stakeholders of the society involved in solving the problem.

at 10:26 pm on Tue, Oct 15, 2013Posted by Mohan Raj

The media line on this issue is; “Pension costs continue to escalate which will bankrupt cities and counties in California.” This is the lie that the “anti-workers’ rights” crowd have touted for the last decade.

The have had the time and the money to perpetuate the campaign to undermine workers’ rights to a Union and to attempt to sour voters and even workers on Unions and the Democrats. Why? “It’s about the Money.”

This “campaign” isn’t about pension costs, it’s about controlling California politics and cutting taxes for the wealthy.  The billionaires that fund these initiatives about concerned about cities or even the residents of California. “It’s about the Money.”

If they really cared about the costs of public pensions they would be targeting the high-end pensions like those identified ten years ago when Orange County bankrupted itself. These pensions, many upward of $100 to $200 thousand a year, are awarded to managers, and other executive positions in State, County and City governments throughout California. And the interesting part of the amounts “earned” by management position holders is that none of them are members of Unions. And, since the managers are the ones that would be negotiating the “new” pension benefits for the ‘rank and file’ public employees the managers’ own pensions would never become an issue.

Another factor of this issue is the structure and operation of multi-employers plans, as are both the California Public Employees’ Pension Plan and the State Teachers’ Pension Plan. The Plans are structured by setting the benefit that will be earned at retirement and funding the plan to fulfill that promise. Public Agencies who; 1. set the benefit, 2. determine the funding assumption (meaning the percentage that is expected to be earned each year to cover the promised retirement amount, and 3. determine how much they will pay towards the needed funding; are the ones who have created any unfunded amount for the retirement system in which their agency participates.  When you hear that an agency decided to not pay the annual funding amount it usually included a statement that the retirement promised is fully funded and they didn’t need to make the payment that year. That is what has caused any funding problems, as well as the Wall Street manipulation of the stock market and banks.

Not one Union or public employee has had anything to do with “unfunded liabilities.” That problem has been caused by the purposeful mismanagement or simple mismanagement of “managers” that is to blame.

That having been said; the premise put forward by the “It’s about the money crowd” that there is a critical problem is completely, falsely and purposely miss-stated. All retirement plans have future funding requirements that are to be met over a 20 or 30 year period. That is because a plan would normally state what the pension expectation would be by an employee (participant) would earn at their retirement. As stated in the review of California retirement plans, the benefits are, on average, 79% funded. This would provide sufficient and expected time for benefits to be funded during the future operation of the retirement plan.  But, those who would undermine the payment of a retirement to anyone, continue to mislead the public with their lies a half-truths.

This is where having an organized labor movement is vital to informing the public about the full story and about the how retirements are not only important to public employees, but as well to every private sector employee who benefit by good examples of retirement plans, the economic multipliers that retired folks with pensions inject into the private sector economy and the power that employees have when they negotiate together.

The State Federation of Labor needs to have a dedicated website regarding the attack on public sector employee retirements and the issue of pension in general.  And, as well, early television ads directing California voters to the website to give the worker campaign an edge.

The average voter is only hearing speeches and commentary from the “It’s about the money” elites - they already have their website up - who have consistently attempted to create a feud between workers. They haven’t been successful yet, however, after going through a five year recession people tend to become embittered and looking for someone to blame for their situation.  If Labor is not there to inject the truth into the discussion who knows how this might turnout no matter how many working families will suffer.

at 11:30 pm on Sun, Dec 22, 2013Posted by Richard Slawson

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