Members of California’s largest state employee union approved a contract Tuesday that cuts pay by nearly 5 percent for 95,000 government workers and rolls back pension benefits, a move that will protect them from more sweeping government furloughs.
About three-quarters of those who voted ratified the Service Employees International Union Local 1000 contract, after union leaders reached a tentative agreement last month with Gov. Arnold Schwarzenegger. The contract was approved in October by the Legislature as a provision in the state budget and is part of Schwarzenegger’s attempt to control pension costs across all of state government.
Current estimates place California’s unfunded pension debt at somewhere between $300 billion and $500 billion, depending on the predictions one uses of future stock market and investment performance. The good news is that Schwarzenegger did insist that some modest pension reforms be part of the budget deal. But at best, these reforms—requiring increased contributions from many existing public employees and slightly reduced benefits in the defined-benefit pension plans of new state workers, depending on final union negotiations—would shave off $100 billion over the next 30 years. Something more has to be done about pension promises to current workers. But despite Republican legislative pressure for a tougher deal, the budget includes only Schwarzenegger’s limited measures. And state contributions to the pension fund will be rising steeply in coming years, which will put further strain on an already precarious budget.
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So looks like $100Bn of the $400Bn problem might have been solved!
