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Pension Reform Deal Falls Apart in California State Legislature

by Lucy Ma, published


Lawmakers in California are racing against the clock to finalize legislative matters before taking off for a month of summer recess starting this Friday. Here are some highlights:

Pension reform deal falls apart:

Earlier in the year, Governor Jerry Brown put out a 12-point pension reform proposal and urged the Legislature to act on solving California’s looming pension crisis. Brown’s proposal would’ve put a stop to some of the more questionable public employee pension practices (such as pension spiking), but gained little traction with Democratic leaders right out the gate. Republicans were quick to jump at the opportunity of turning the Governor’s proposal into a set of bills in both houses with language identical to that of the Brown Administration’s. Needless to say, their efforts were effectively curtailed when the plan and related bills were referred to “interim study” by the legislative committee.

It wasn’t until recent weeks that talks started to pick up around a counter pension proposal being crafted by Democratic leaders within the committee. Their version was to include increasing the full retirement benefit age for new non-public safety workers from the current 55 to 67, along with several of the Governor’s original points. Where they differed most dramatically was on benefit reductions- lawmakers were only prepared to offer a “hybrid plan” which does far less to limit the state’s liability in contributing and guaranteeing returns in comparison with Brown’s original 401(k) style plan.

Talks between Governor Brown and Democratic legislative leaders broke down earlier today, as the two parties were unable to agree on the new proposed pension reductions. While they have agreed to continue to work on resolving differences- it’s safe to say that lawmakers are unlikely to deliver a reform package before the start of summer recess.

Homeowner Bill of Rights:

Yesterday, state lawmakers approved SB 900 and AB 278, the most controversial part of a legislative package sponsored by California Attorney General Kamala D. Harris. Their successful passage through both houses effectively created the nation’s strongest legislation to help underwater homeowners avoid foreclosure. The full package was modeled on a $25 billion multi-state foreclosure lawsuit settlement that came down earlier in the year against five large banks.

Attorney General Harris called the passage a significant step forward.

"These common-sense reforms will require banks to treat California homeowners more fairly and bring more transparency and accountability to their practices in our state. Responsible homeowners will have a better shot to keep their homes," said AG Harris.

Republican lawmakers on the other hand, were far less optimistic. They warned that the passage of the bills will only further stall economic recovery and make it even more difficult to secure loans.

Governor Brown has indicated his support for the legislation and is expected to sign it into law, with changes taking effect January 1st, 2013.

Bill proposal would allow children in CA more than two parents:

State Senator Mark Leno introduced SB 1476, which would amend California’s current two parent per-child law to allow for additional interested parties to meet a court established definition if needed. The author said the bill idea originated from an appellate court case in which a child had two parents unable to provide care and a biological parent then wished to step in but was unable to do so because of current statutes.

Similar legislation already exists in Delaware, Maine, Pennsylvania, and the District of Columbia. SB 1476 gained successful passage out of the Senate earlier in the year, and will soon be up for consideration in the Assembly.

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