California Counties May Back Alternative Pension Reform Plan

March 2, 2005 ( - Opposed to a defined contribution retirement plan for California public employees, the staff of the California State Association of Counties (CSAC) has tentatively proposed reducing retirement benefits instead of ridding the state of its defined benefit plan.

As part of the chorus that is opposed to Governor Arnold Schwarzenegger’s proposed switch to a defined contribution-style retirement plan for future employees, CSAC will meet on March 17 to discuss adopting an alternate reform plan that counties could use as a compromise with lawmakers in Sacramento, according to The Californian, a San Diego-based newspaper.

The group represents 62 counties, many of which are in the red with rising pension benefits. One, Riverside County, posted a deficit of $471 million last year, due partially to large benefit payouts to retired country employees.

A proposal backed by the county would attempt to curb benefit payouts instead of switching systems, according to the paper. Currently, employees can retire after 30 years of service and receive 90% of their highest year’s salary as early as the age of 50. The plan, which was endorsed by county officials on Tuesday, would reduce 30-year employee benefits to a maximum of 60% of the average of their best three years.

Many groups have weighed in on the issue of altering the Golden State’s massive defined benefits plan to make it more economically viable. Schwarzenegger has recently said that he will support any effort by legislators to alter the system to make it more fiscally sound, but he has faced stiff resistance from many groups, including officials from the large pension plan (See Schwarzenegger Supports CalPERS Overhaul Efforts ) . The non-partisan state Legislative Analyst’s Office said that Schwarzenegger’s plan could save the state $1 billion (See Golden State Analysts: Pension Reform Could Save More than $1B ).