Readers of this blog will know that an initiative has been filed – which appears to have some serious money behind it for a campaign – that would cover UC’s pension and retiree health care programs. In principle, it would be up to the Regents to make any plan revisions the initiative would allow. However, they would be compelled to produce an analysis of what such revisions would be and it might be politically difficult to resist implementing such plans, particularly if other state and local entities are doing it.
The Legislative Analyst’s Office (LAO) has now prepared its analysis of the initiative. It can be found at http://www.lao.ca.gov/ballot/2013/130690.aspx. That step means that signature gathering, which typically costs $1-$2 million can get underway soon. Up to now, the Regents have no formal position on the initiative and won’t even be meeting until January.
Proponents of the initiative argue that they would not take away any past accrued pension benefits of existing employees. Only future accruals would be potentially affected. That innocent-sounding statement is both true and misleading. In the context of defined-benefit pensions, most formal accruals occur toward the end of long careers of older workers. Those workers who don’t fall into that category yet have in fact not accrued very much in a formal sense. Up to now, however, those workers had the expectation that if they stayed under the plan in a long career, the currently promised future benefits would be paid. The initiative would allow government entities, including UC, to void that expectation. In effect, even if the Regents were to elect not to revise their plans, the current value and attractiveness of the UC retirement promise would be reduced. The Regents would be making a retirement promise that they did not have to keep.
At present, UC has taken no steps to try to remove itself from the initiative’s coverage, as we have previously reported. So if the backers have the $1-$2 million needed, nothing can stop the initiative – with its UC coverage – from getting on the ballot, either in 2014 or 2016.
It just keeps coming: