October 23, 2014

Today the Los Angeles Times wrote a one-sided story about complex pension issues and got it wrong. The Times' bias starts and ends with its insistence that "The 2012 reform law was silent about whether new employees would get (additional pay compensations) too." Nothing could be further from the truth. The Public Employee Pension Reform Act (PEPRA) is not “silent” but instead it explicitly states the handful of compensation items that should be excluded from new employees' pensions (e.g., bonuses, uniform allowances, car allowances, etc.). Beyond those exclusions explicitly mentioned in the statute, PEPRA did not clarify which other pay items to include or exclude from new employees' pensions - which is why reasonable people and pension systems can have various perspectives on how to interpret and implement the sweeping new pension reform law.

CalPERS staff has fully cooperated to answer all of the Times' questions, explain the facts, provide a balanced perspective, and point out flaws in some of the data the Times was using. The Times fails to mention: that CalPERS is working with employers and stakeholders to review the list of compensation items to see if any of the items are no longer used or are obsolete; that CalPERS actually supported the 1993 legislation so it would be able to restrict which pay items could be counted towards pensions; that the 1993 legislation included strong anti-spiking provisions which CalPERS also supported (a prohibition on Final Settlement Pay counting towards pensions); that CalPERS did a cost analysis on the entire PEPRA bill (which is where the $42-55B savings estimate came from); and that, in fact, the employers have not previously been submitting "detailed pay and bonus information" due to previous technology restraints, but instead had often been submitting all such employee pay in lump sum categories without itemizing the different pay items like they now are required to do for new employees.

The Times used a news article to continually editorialize by referring to these pay items as "bonuses," "perks," and "sweeteners" – almost as if they didn’t read the new PEPRA statute, which explicitly prohibits "bonuses." We urge the LA Times to present a more balanced perspective on this important issue.

View the article.