Former San Jose Mayor Chuck Reed is trying to restore fiscal sanity to the state of California by taking on the Goliath CalPERS, America’s largest public pension fund, with a pension reform measure for the November 2016 ballot. Reed is leading a group that may offer an initiative for review by state officials by May, according to the San Jose Mercury News.
Reed, a noted reformer despite also being a Democrat, has tried to rein in pension expenditures before. In 2014 he tried to putt a pension reform measure on the statewide ballot, but gave up, saying Attorney General Kamala Harris had approved wording that was biased toward unions. Reed fought for a pension reform measure for San Jose during his second term as mayor, a measure that still languishes in the courts.
The first step for Reed’s current plan would be to elicit a title and summary from the state for his initiative. If that is accomplished, he would need the signatures of 585,000 registered voters to put the measure on the ballot.
The $300 billion CalPERS supervises over 3,000 state and local agencies, according to Reuters. Its spokesperson Rosanna Westmoreland said, “Pensions are an integral part of deferred compensation for public employees and a valuable recruitment and retention tool for employers.” The pension fund is unrepentant about its agenda; it claims it will increase pension contributions for most cities in California by as much as half in the near future.
Reed is adamant; he told Reuters, “CalPERS has dedicated itself to preserving the status quo and making it difficult for anybody to reform pensions. This is one way to take on CalPERS, and yes, CalPERS will push back.”
CalPERS has argued that California cities could not legally reduce pension benefits even if they went bankrupt, but Judge Christopher Klein rejected that last October in a verbal ruling. According to the San Diego Union-Tribune, Calpers refused to accept that ruling, stating, “The ruling is not legally binding on any of the parties…or as precedent in any other bankruptcy proceeding…”. But then, in February, as the Wall Street Journal reported, Klein issued a final ruling denying Calpers, writing bluntly: “It is doubtful that CalPERS even has standing. It does not bear financial risk from reductions by the City in its funding payments because state law requires CalPERS to pass along the reductions to pensioners in the form of reduced pensions…CalPERS has bullied its way about in this case with an iron fist.”