After following up on the recent superior court decision to reject the Professional Engineers in California Government union’s lawsuit against Caltrans for instituting a P3 contract for the second phase of the Presidio Park replacement project in San Francisco, I had a discussion with PECG’s executive director and also did some digging into the public union situation in California.

Conclusion: It’s nowhere near the hysteria level of Wisconsin, but it’s still early in the game.

Bruce Blanning, PECG’s executive director, says that while public employee unions are facing heat in a number of states because of perceived bloated benefits and pensions, California union entities, including the 13,000-member PECG, have been adjusting to a number of cuts for several years because of severe budget deficits.
“Obviously, government cannot cheat employees by cutting retirement and healthcare for current employees – the courts would not let that happen,” Blanning says. “Last year, Gov. Schwarzenegger pushed through changes in contributions for new hires, but real savings on that end will take decades to take effect.”

Last week, the bipartisan Little Hoover Commission recommended that state and local governments roll back pensions for existing employees, dump guaranteed retirement payouts and put more of the pension burden on workers. Another group echoing a similar plan is the conservative California Foundation for Fiscal Responsibility.

The commission’s report, titled “Public Pensions for Retirement Security,” recommends a “hybrid” model that combines a lower defined-benefit pension formula with an employer-matched and risk-managed defined-contribution plan. The commission also suggests the state explore options to extend Social Security old-age benefits to all uncovered state and local public employees, following a model adopted for federal employees 25 years ago.

The commission says it acknowledges the significant legal challenges to modifying pension benefits for current workers.

“Nonetheless,” says the commission in a press release, “the governor and legislature should set uniform standards for the 85 defined-benefit pension plans in California, including a cap in the $80,000 to $90,000 range of the maximum salary that could be used to calculate pension benefits; eligibility ages for pension benefits that do not encourage early retirement; a requirement that employees and employers share the normal costs of funding their pension plans; clear definitions of final compensation to prevent ‘spiking’; a prohibition against contribution ‘holidays’ when employers do not pay into the funds; a ban on retroactive pension increases; and steps to improve accountability and transparency.”

Blanning says whatever happens next will depend on negotiations with the public unions and Gov. Jerry Brown, who’s beholden to public unions, especially the teachers, and the legislature.

PECG is currently one of six public unions that are not covered by a new contract with the Brown administration, and, as such, are still subject to furloughs, which were introduced by Gov. Schwarzenegger more than two years ago. Unless the unions agree to alternate savings, employees will continue to face three furlough days per month through June, which amounts to an approximate 14% pay cut, according to state finance officials.

Whether you agree with the current Republican crackdown on public unions (or unions in general, public or private), state mandates for balanced budgets will only mean continuous cuts until the economy, ravaged by the Wall Street meltdown, recovers and tax revenues increase. That’s the bottom line.