Issues Update
Pension Reform Proposals
September 23, 2009
Public reports have documented several ideas to change public employee pensions. The McCauley Public Employee Pension Reform Act would have allowed government employers in California to negotiate with their employees and retirees to reduce vested pension benefits. The initiative did not qualify for the ballot because it did not collect the required number of signatures. A second McCauley initiative called the McCauley Pension Recovery Act is still in the signature-gathering phase. It would impose an income tax surcharge on pension benefits that exceed $40,000 per year. Additionally, Governor Schwarzenegger has indicated that he wants to roll back the retirement formula for future State miscellaneous employees to 2 percent at 60 instead of the current 2 percent at 55, and require future State employees to work 25 years for full retiree health coverage in place of the current 20-year requirement.
In January 2009, city managers in the San Diego City/County Managers Association recommended to the League of Cities a second tier pension option that could be implemented by cities in San Diego County.
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