Debate over pension reform continues at county level
Issue is biggest financial concern facing the state, assemblyman says
By Daniel Wolowicz camarillo@theacorn.com

Former 38th District Assemblymember Keith Richman has called the rising costs of California's public employee pensions a ticking time bomb that could send the state into financial ruin.

"I think people are generally surprised and don't know how bad the situation is," Richman said last week. "In fact, the majority of Californians still don't even know we have an issue."

Richman, a physician turned politician, continued his push for pension reform at a luncheon hosted by the Ventura County Taxpayers Association at Las Posas Country Club in Camarillo.

"This is really the biggest fiscal issue facing the state of California," said Richman, who termed out as an Assembly member last year. "This money that's going to go to pay for these skyrocketing pension costs and retiree pension costs is money that's not going to education, higher education or our state's infrastructure."

Elected to the Assembly in 2000, Richman is not eligible for a state pension due to term limit reforms that took effect in California in 1996.

Richman said state and local government face somewhere between $200 billion and $300 billion in unfunded healthcare and retirement pension costs for public employees.

Attempts to rectify

Gov. Arnold Schwarzenegger late last year announced his plan to form a bipartisan commission to help address pension fund problems.

The announcement of the 12member commission came nearly two years after critics blasted the governor's June 2005 proposal for pension fund reform.

Opponents of the governor's proposal feared the plan would bar widows of fallen firefighters and police officers from collecting their spouses' death benefits.

Though the commission's members have not been named, Richman said it's not likely that pension problems will be solved by the Legislature. He said special interest groups- - namely public employee unions- - will block any reform measures.

"I don't hold any confidence that the Legislature is going to address this issue," Richman said. "One of the most powerful special interest groups in Sacramento is the public employee union. They don't have any interest in resolving this issue, and so it's something that's ultimately going to need to be addressed by the initiative process."

View from the other side

Both CalPERS, the California Public Employees' Retirement System, and CalSTRS, the California State Teachers' Retirement System, argue that pension-reform advocates use an unfair snapshot of their pensions' performance to show financial mismanagement.

Although both pension funds suffered billion dollar losses when tech stocks crashed five years ago, union officials say the funds have for decades posted steady growth, and have continued to make returns since 2001.

Richman said both pension funds have unfunded liabilities of more than $20 billion.

"The socalled time bomb label was used to scare the public, when assets dropped during the temporary stock market downturn in 200003, which reduced the asset value of all investors," said Patricia K. Macht, CalPERS' assistant executive officer, in a written statement.

Macht said the fund "which hit a low point of $137 billion at the bottom of the stock market downturn, (is) today $228 billion and growing."

Carolyn Widener, chair of the teachers' retirement fund, said in her written statement that "in the last election, Californians overwhelmingly rejected Dr. Richman's misdiagnosis of their retirement problem."

"After two years of debate, we now know that the more dangerous retirement time bomb is in the private sector," Widener said. "Meanwhile, Dr. Richman's insistence on attacking our successful state pensions is similar to a doctor prescribing surgery, but then amputating the wrong leg."

Problems with healthcare

Widener said the root of the problem is the failing healthcare system "with its exploding numbers of outofcontrol costs and declining access to affordable, quality care."

"Only then will we have a healthy enough economy to fund retirement security for all of us working in both the private and the public sectors," Widener said.

Something must be done

Richman, a Republican from Northridge, said that regardless of upturns in the state's two main pension funds, city and county governments across California are overburdened with paying benefits for retired public workers.

San Diego, Bakersfield and Salinas, Richman said, are cities forced to make tough budget cuts because of rising pension costs.

He said Orange County officials face $4 billion in debt and that the county's finances are in worse shape now than when the county declared bankruptcy in 1994.

School districts, especially Los Angeles Unified, are also facing rising costs for retiree healthcare benefits, Richman said.

Pension reform advocates say the LAUSD may declare bankruptcy because it expects to owe nearly $10 billion in retiree healthcare costs. If that were to happen, Richman said, it would be up to the state to pay the district's debt.

Officials said the county's budget is strong and its pension funds are in good shape. Concern over the state's pension system is what drew a number of the area's city and county officials to hear Richman speak.

"I think Keith Richman has just been a real strong spokesperson for the reform that's needed, and that's why I've come to listen to him," Ventura County Supervisor Kathy Long said. "As he said, in our county, we're in a good position. Our funding level is good. We've held back on new benefits. . . . We're in good shape, but I still think there's room for reform."