Pension measures inadequate

In the Nov. 8 election, Modesto voters will get to weigh in on public pensions. Unfortunately, whatever they decide on Measures Q, R and S won't do much to reduce the city's long-term pension costs.

For one thing, the three measures are all advisory; as such, they don't force the City Council or the city's employee unions to do anything.

For another, two of the measures deal with issues — retirement age and pension spiking — that already have been modified for employees hired as of next year. Any further changes would require more bargaining with the unions.

And for a third, Measure Q proposes a radical change that would be exorbitantly expensive — and would at the same time leave city employees who aren't part of Social Security without a safety net in retirement.

A little background

Around California, most public agencies have committed to defined benefit retirement plans that they won't be able to pay for in the long run. The plans vary, even among those that, like Modesto, are part of the California Public Employees' Retirement System.

Today's biggest problems date back to 1999, when the Legislature approved significantly enhanced pensions for state workers. The basic formula went to 3 percent at 50 for police and other public safety employees and 2.5 percent at 55 for other workers. In other words, a public safety worker could retire at age 50, earning 3 percent of his or her last salary for each year worked; thus, 25 years on the job would equal 75 percent pension at the last salary worked.

The city of Modesto was among the first local governments to follow the state's move to the higher retirement promises, subscribing to the argument the city would lose good employees or wouldn't be able to hire good people if its retirement benefits were below the norm.

In May 2000, the City Council unanimously approved the enhanced retirements effective the following year. Carmen Sabatino, currently a candidate for Council District 3, was mayor at the time; none of the other current council members or candidates were involved in that 2000 decision.

These generous pensions rested on the wildly optimistic claim that investment returns — from the stock market and elsewhere — would be so high that the enhanced retirements could be made at no cost to government or the taxpayers.

By 2004, smart minds in Sacramento were realizing that these kinds of pension programs were not sustainable — because investment returns go up and down and because people were retiring so young that they would spend as many or even more years collecting pensions than they did actually working.

The stock market collapse of 2008 finally got everyone to realize that these generous public pensions are a serious problem that needs to be addressed.

On the ballot

Although pension concerns have been discussed for two-plus years, these three measures were rushed onto the Modesto ballot without the normal vetting process for agenda items.

City Councilman and mayoral candidate Brad Hawn wrote the proposals and put them on the council agenda on the last possible date to get them on the Nov. 8 ballot. The unions argue, with some justification, that this was a campaign strategy more than a serious effort at reform.

Had the proposals been thoroughly reviewed by the city manager and deliberated by a council committee before going to the full council, they probably would have been worded differently.

For example, we find it troubling that none of the measures address some costly things that the city can and should do something about: