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In coming posts I’ll examine some of the workers’ comp bills that are bubbling through the legislative process.

But overall it’s clear that this will not be a blockbuster year for any big changes in workers’ comp.

The atmosphere in Sacramento is too poisonous, and workers’ comp is not high on priority lists.

What are likely to be slugfests are efforts to deal with the funding crisis of California’s unemployment system and moves to reform pensions of public employees.

The funding shortfall of the unemployment system continues to garner little public focus, but it is a huge problem. By the end of 2011 California may owe $13 billion to the U.S. for loans to keep the unemployment system afloat. Here’s an excellent analysis by Mark Lifsher of the Los Angeles Times:
http://www.latimes.com/business/la-fi-e … rint.story

Meanwhile, in the wake of the collapse of negotiations to get a budget balancing tax extension on the June ballot, Governor Brown has signaled support for some reforms of public pensions.

Here are the points that Brown is considering:

PENSION REFORM PROPOSAL

APPLIES TO STATE AND LOCAL GOVERNMENTS

MARCH 2011

1. Eliminate Purchase of Airtime. Would eliminate the opportunity, for all current and future employee members of all state and local retirement systems, to purchase additional retirement service credit. (RN 14777) (Note Walters, SB 522, would eliminate Air Time)

2. Prohibit Pension Holidays. All California public agencies would be prohibited from suspending employer and/or employee contributions necessary to fund the normal cost of pension benefits. (RN 14777)

3. Prohibit Employers from Making Employee Pension Contributions. All California public agencies would be prohibited from making employee contributions that fund the normal cost of employee retirement benefits in whole or in part. (RN 14777)

4. Prohibit Retroactive Pension Increases. All California public agencies would be prohibited from granting any retroactive pension benefit increases, such as benefit formula improvements that credit prior service. (RN 14777)

5. Prohibit Pension Spiking: Three Year Final Compensation. Final compensation for new employees would be defined as the highest average annual compensation during a consecutive 36 month period. (RN 14777)

6. Prohibit Pension Spiking: Define Compensation as Only Regular, Non-recurring Pay. Compensation means normal rate of pay or base pay. (RN 14777) (Note Simitian, SB 27, would exclude from defined benefit changes in compensation principally for the purpose of enhancing benefits; would place stricter limits on creditable compensation)

7. Felony Convictions. Prohibits payment of pension benefits to those who commits a felony related to their employment. (RN 14777) (• Note Strickland, SB 115, similar prohibition)

PROPOSALS UNDER DEVELOPMENT

Impose Pension Benefit Cap

Improve Retirement Board Governance

Limit Post-Retirement Public Employment

Hybrid Option

Address CalSTRS Unfunded Liability

To see actual proposed bill language on these points, go here:
http://www.scribd.com/doc/52025321/Gov- … m-proposal

We’ll likely see versions of these pension reforms (and more) in initiatives.

Meanwhile, those of us in the comp system toil in our usual vineyards, as the system for the moment appears surprisingly stable.

Julius Young
www.boxerlaw.com
www.thecompguys.org
www.workerscompzone.com

Category: Political developments

Julius Young

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