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On Monday, we wrote an editorial criticizing state Treasurer Bill Lockyer for his theatrics in resigning from the advisory board of a Stanford research group that has raised alarms about the state’s pension crisis. The team, headed by former North Bay legislator Joe Nation, has crunched the numbers and contends, among other things, that putting off pension reform is costing the state $3.4 million a day.
Today, we received Lockyer’s response to the editorial. I’ve posted it below. Given that he doesn’t address what he found wrong with Nation’s “snake oil,” we’ve invited him to write a longer piece that we could run as a Close to Home explaining why he resigned from the board. If he declines, we will just run this as a letter to the editor on Wednesday.
- Paul Gullixson
“Regarding ‘A head-in-sand approach to pension issue.’ The Press Democrat makes a fatal leap of logic: I don’t buy Joe Nation’s snake oil; therefore, I’ve got my head in the sand on pension reform. Wrong.
I have long said public pensions are too expensive and politically unsustainable. I’ve talked about specific reform ideas.
Mandate for new employees a hybrid plan under which a defined benefit component, including Social Security, would guarantee 75 percent replacement income for employees who work at least 40 years. Supplement defined benefits with a 401k-style defined contribution component. Increase the number of years folks have to work to collect full benefits. Heighten the age at which employees can start collecting benefits.
To speed the process of cutting unfunded liabilities, many current employees would have to switch to the new plan. They can’t be forced. But we can find ways to encourage current employees to move voluntarily to a plan that saves taxpayers’ money, and theirs. For example, we could reduce how much employees contribute to the new, lower-cost plan. They would trade increased take-home pay (not a pay raise) for less generous retirement benefits. This approach might be particularly attractive to younger workers.”
Bill Lockyer
California State Treasurer
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“Given that he doesn’t address what he found wrong with Nation’s “snake oil,” we’ve invited him to write a longer piece…”
So you gave Lockyer the opportunity to explain why Nation’s numbers were “snake oil” and he did nothing of the sort.
It’s like watching someone stand next to a broken water pipe proposing more paper towels as the solution.
Sure, if you can get enough & keep’em coming you may avert a flood. For awhile.
Pension Reform is just more paper towels.
Let’s get our hands dirty & fix the damn leak!
Ban all Public Employee Unions and start over.
Pass tort reform even if it only applies to Medical lawsuits and watch the cost of health care decline. Watch corporations FLOCK to CA to take advantage of lower Health Care costs!
OF COURSE the Medical Industry will use the cost savings to reap higher profits but only at first. Their budgets are under FAR TOO MUCH scrutiny to get away with that for long. And despite our Government’s desire to be the “you win, you lose” police there is still some competition in Health Care and that competition will force them to lower rates as costs go down.
Or we can just wait for Obamacare and flood the industry with fleshly printed money! Yeah, THAT’LL reign in “costs”!
If Joe Nation were to report a crime, he would double the estimated height of the perpetrator, just to make for better coverage in the PD.
When Joe Nation dictates assumptions to trained actuaries with a result that everything looks twice as bad as it is, that is “snake oil.”
@JohnnyB… The formula and plan can be changed going forward and it does. It’s called contract negotiations…But it also happens illegally like when the county promises lifetime medical for safety employees in exchange for them not taking raises and for paying larger percentages into their pensions and then having the rug pulled out from under them after 30 years service. A deputy working for 30 years made approximately $350,000 less than his counter part at S.R.P.D. because the deputy opted for lifetime medical after retirement instead of pay, which now he/she won’t get.
I wouldn’t call over $1.1 Billion in principle and interest, on $600 Million of Pension Obligation Bonds, $800 Million still due over the next 20 years, to make up for the shortfall and failure of Sonoma County’s pension actuarial target of 8% (now 7.75%), “snakeoil”.
The end of 2011 calender year will note an additional $400 Million in unfunded accrued actuarial Liability, again due to actuarial accounting gimmicks and chicanery that would result in jail if practiced in private industry. The social consequences of this willful blindness has tremendous consequences for those once served, including the loss of 25% of our county workforce (1000 employees)to retirement in the last 7 years. We have gone from 4400 employees to 3400, with over 4000 retirees and 3400 actives (the first County in the state to have more retirees than active).
I agree with the post that in order that we try to honor the obligations of past service, we need to change the terms of future service for everybody especially current work force. If we can’t set aside enough for retirement benefits for the year earned, it is not fair to the next generation of County workers and taxpayers to pay for the shortfall with lost jobs and services that this County used to provide for generations.
Joe Nation is doing great work as a lamplighter exposing the generational injustice we’re in the midst of; reforms to reinvent government and the social compact are essential.
This is not anti-union, retirement or public employee. I am tired of seeing young and less senior county workers laid off to fund an unsustainable system that needs to change.
It is “snake oil” Joe Nation has been looking for a way out of his political irrelevancy for a long time and I suppose now he is bent on riding this one until the wheels come off. No matter that his Stanford “study” has been debunked and disavowed by Stanford and others. He’s got a long way to go to get anyone to support his cooked figures and big business cronyism.
Perhaps the staff at the PeeDee could go back and research Mr. Lockyer’s votes over his very long career as a state legislator to determine whether his current position on public employee compensation is consistent with his record?
I’m going to take guess and say it might be somewhat less than consistent.
What say you PeeDee?
The house of cards is beginning to come apart, and it can’t be fixed until the deck’s reshuffled.
I think Bill Lockyer is spot on. If we can get to a 50-50 split of pension costs, then we would likely see existing employees bargain for a lessor retirement system in return for lower deductions. Otherwise, we’re stuck having to wait for turn over before savings are realized.
While whatever benefits have already been earned cannot be changed I do not understand why the formula or plan cannot be changed going forward. For example, instead of 3%/yr worked make it something else for FUTURE years. The workers are not giving up anything they have already earned.
This is very fair. Older workers with many years will see little of any change. Younger workers will have decades to plan. To say otherwise is to say that once an employee is hired the terms of employment can never be changed in the future, an absurd proposition.
I believe there may be some state law preventing this. If so this is where change must take place first.
D. Devil’s Advocate, Esq. claims that public pensions “can be managed.”
Uh, yeah.
We’ve seen how government “manages” public pensions. lol What a lame statement.
Public employees allowed to retire a full 17 years before private sector workers can apply for social security.
Public pensions under-funded to the tune of $ 500 BILLION dollars in California at this latest, but not only, pension study. The rest all said the same thing about UNDER-funding.
You have Obama-care for your medical coverage. The public pensions are to blame for the government budgetary crisis.
Why should Lockyer write a close to home and help the PD sell papers? How about doing some real reporting and include in your own article what specific reform ideas he has already discussed?
This is why you’re being sold.
Healthcare costs are the real problem. Pensions can be massaged, but gov’t has no way of controlling health costs (price controls would be a disaster).
Of course, CA is in the same place as Italy, Spain, et al., vis a vis the currency. The Fed is happy to debase the dollar, to print its way out of trouble, but in high cost of living Cali, the declining dollar makes it even more difficult to survive. People and companies leave, reducing the tax base, local govs are underfunded, they cut entitlements, and the spiral rides all the way down to dirt.