Public employee pensions take a hit

It’s been a bad week for public employees. In Wisconsin, Governor Scott Walker, who gutted the rights of public employees in his state last year, handily defeated his opponent in a recall election. Here in California, San Diego and San Jose passed ballot initiatives cutting retirement benefits for government workers.

The most surprising part was that the decisions weren’t even close. In San Diego, two-thirds voted for the reduction, while in San Jose, 70 percent supported it.

San Diego Mayor Jerry Sanders backed the proposal in his city:

“It just shows the frustration people have with pension benefits that are out of control and taking away from city services.”

The push in favor of the ballot initiatives in both cities focused on one message:  Public employees shouldn’t get more than they would get in the private sector. If the private sector has to cut back, so should the public sector.

It’s true that pension obligations often weigh on city budgets. In San Jose, for example, the city’s payments to its employees’ retirement funds exploded from $43 million in 1999 to $231.2 million this year. That’s about 20 percent of San Jose’s general fund.

That said, there are two sides to the fairness issue. Public employees were promised these retirement benefits when they took their jobs. Some may have forfeited higher pay to stay in public service. Essentially, slashing benefits is akin to breaking a contract, because the plans will affect not just new hires, but current employees.

As Henry Bayer, executive director of a major public employees’ union in Illinois, pointed out, this may not be such a positive thing:

“This is part of a national effort to reduce retirement security for public employees, and it’s very unfortunate.”

Already some unions have filed a legal challenge to the measures, setting up a showdown in the courts.

Surprisingly, efforts like those in San Diego and San Jose have bipartisan support. In fact, even Gov. Jerry Brown is on board. It’s hard to argue with a proposal that’s going to save a billion dollars for San Jose over 30 years — even if thousands of public-sector retirees suffer because of it.