California Gov. Edmund G. Brown Jr.’s plan to create a hybrid pension plan for new state employees was rejected by state Democratic legislative leaders who instead are expected Tuesday to propose limiting pension benefits for future public employees.
State Senate President Pro Tem Darrell Steinberg, a Democrat, said in an impromptu meeting with reporters in Sacramento on Monday afternoon that he expects the new bill will preserve the state’s current defined benefit plans, but caps the amount of pension benefits newly hired public employees can obtain.
The bill will not contain provisions for a defined contribution plan after certain income limits are reached as Mr. Brown had proposed, Mr. Steinberg said.
He would not disclose what the benefits cap would be and also stressed that details of the pension reform bill had not yet been agreed upon. “This is not a deal,” Mr. Steinberg said, “I’m telling you I'm confident there will be.”
Mr. Steinberg said he hopes the bill will be passed by the state Assembly and Senate before the close of the current legislative session on Friday.
Mr. Brown introduced his hybrid plan in October 2011, but the only lawmakers to embrace it were minority Republicans who introduced legislation that never passed. Democratic legislators pressured by public employee union supporters refused to go along with the changes.
But Mr. Steinberg said Monday that some unions would not be happy with the latest plan.
“There are going to be some people in organized labor who are not going to be thrilled at it,” he said.
Mr. Steinberg said the plan would save tens of billions of dollars over the next 20 to 30 years, but offered no immediate cost analysis.
What is unclear is whether Mr. Brown would sign legislation that excludes his provision for a hybrid pension plan. Officials of the governor’s press office did not return phone calls.
The $238.4 billion California Public Employees’ Retirement System, Sacramento, set special meetings for Wednesday morning and Thursday afternoon to discuss the expected legislation.
CalPERS spokesman Robert Glazier said the staff will review the bill and provide a preliminary analysis to the board at its special meetings. Staff will also estimate the potential cost savings that would result from the bill.
“Recognizing the importance of this proposed legislation, CalPERS actuaries will do their best, in the time available before the anticipated floor votes on Friday, to evaluate the plan and provide a ballpark estimate of cost savings,” Mr. Glazier said.