Sacramento, CA– California Governor Arnold Schwarzenegger has vetoed landmark pension reform legislation stating that the bill did not apply consistently to all employees. AB 1987, authored by Assemblywoman Fiona Ma of San Francisco, would have eliminated pension spiking, double dipping, golden handshakes and would have provided audits of county pension systems. Both houses of the California State Legislature overwhelmingly supported AB 1987.
“This veto keeps the status-quo. AB 1987 would have put us on a path to real pension reform and restoring taxpayer trust,” said Assemblywoman Fiona Ma. “Sadly, contrary to his supposed commitment to pension reform, the Governor’s veto of AB 1987 sends a message that pension spiking and double dipping is acceptable.”
The average state employee pension is $2,100 a month and 78% of all retirees earn less than $36,000 a year. The abuse that has received much of the public scrutiny has occurred at the highest levels of management.
AB 1987 would have prevented accrued vacation time and other forms of leave in excess of what is earned in a year from being cashed out and included in retirement calculations to boost an employee’s pension. Large severance or settlement pay for a retiring employee would have no longer been calculated into the pension equation. The bill would have also prevented employees from retiring on Friday and being re-hired on Monday, a practice known as double dipping. Finally, AB 1987 would have, for the first time, provided oversight and audit responsibility to the local retirement boards. Under AB 1987, all retirement boards would have the power to deny intentional spikes or manipulated pension payments.
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