By Ed Mendel, California Political Review
As retirement costs grow, traditional labor disputes over wages and health coverage have a newcomer. Pensions are one of the issues in recent strikes by UC hospital workers and San Francisco Bay Area transit workers.
The dispute is not over the amount of pensions promised current workers, widely believed to be protected by court rulings. The sticking point is how the cost of the pensions is split between employers and employees.
UC patient care workers balked at increasing their pension contributions from 5 percent of pay to 6.5 percent. Bay Area Rapid Transit workers make no pension contribution because the employer pays their CalPERS share, 7 percent of pay.
After heavy investment losses in a deep recession, the trend among public pensions is to get employees to share costs and risks. Gov. Brown’s pension reform last year calls for employers and employees to pay a 50-50 split of normal costs.
Last week a BART attorney, Vicki Neutzel, told a fact-finding panel appointed by the governor that the rail system wants to “sustain” its package of medical and pension benefits, but cannot unless employees share the risk and increased costs.
“BART believes and continues to believe it is essential that its employees share in the risk of this benefit, so that the benefit can continue,” Neutzel said, while outlining the pension proposal.
The panel was told the annual BART payment to the California Public Employees Retirement System increased from $3.1 million in 2002 to $50 million this year and is expected to grow at the rate of 7 percent a year for the next four years.
“While labor talks always seem to focus on wage proposals, the cost of maintaining the existing benefit package cannot be ignored,” said Carter Mau, the BART budget manager.
Many unions throughout the state have agreed to a standard post-recession pension cost control: higher employee contributions and lower pensions for new hires. But some have not agreed, and UC is an example of the split.
After a remarkable two-decade “holiday,” when neither employers nor employees made contributions, UC Retirement began to phase in contribution increases for management and labor three years ago.
Most of the UC unions agreed to another step in the contributions on July 1, when the employee share increased from 5 percent of pay to 6.5 percent. But as part of a larger pay and benefits dispute, three unions balked at the higher pension payments.
A union representing a wide range of 13,000 patient care workers held its first strike in May, a two-day action that UC estimated would cost $20 million. Then as allowed under state law when there is no agreement, UC imposed its contract proposal late last month.
The president of AFSCME 3299, Kathryn Lybarger, said in a news release that UC, with “exorbitant” executive pay and pensions, should be subject to the pension cap in the pension reform pushed through the Legislature last year by Gov. Brown.
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(Reporter Ed Mendel covered the Capitol in Sacramento for nearly three decades, most recently for the San Diego Union-Tribune. Originally published on CalPensions.)