California Gov. Jerry Brown, likening his plan to curb public employee pension costs to swallowing “castor oil,” said his proposal is the one most likely to win approval from lawmakers.
“This is more castor oil, I’m afraid,” Mr. Brown said in a rare appearance for a governor at a legislative hearing in Sacramento on Thursday. “This is not going to be easy because we’re cutting back, but that’s the name of the game right now.”
The cost of pension benefits for California’s state workers is forecast to rise to $1.8 billion in the year beginning July 1. Mr. Brown has said his proposal may cut that in half.
Under Mr. Brown’s plan, most new public employees would get a third of their retirement income from Social Security and a third from a so-called defined contribution plan, such as a 401(k), which doesn’t provide a set return. The balance would come from the traditional component. For those who don’t get Social Security, the conventional pension would make up two-thirds.
Current workers would remain in the defined benefit system in which the government carries the investment risk. In February, the Little Hoover Commission, an independent state oversight panel, recommended moving most employees into a hybrid plan, even if it meant lawsuits.
Mr. Brown’s plan also calls for adding two independent members to the board of the $227.5 billion California Public Employees’ Retirement System, Sacramento; limits on double dipping, when a retiree collecting benefits takes another government job; and banning pension spiking, which inflates future retirement payments by manipulating overtime, unused vacation and special compensation.
“I’m writing a plan that has a real possibility to get enacted, and I’ve laid out a pathway that makes the most sense,” Mr. Brown said. “I don’t think we should lurch all the way forward in our first step.”