Pension Reform (OCEA Magazine)
By Rep. Loretta Sanchez
Our nation is slowly emerging from the worst economic crisis since the Great Depression. The dramatic downturn of our economy in recent years has resulted in a significant rise in unemployment and stagnant consumer spending. Getting the economy back on track is everyone’s top priority, regardless of political party affiliation. However, the impact of the recession will linger for decades, even afterour economy has recovered. One area where this will be evident is the overwhelming dilemma state and local governments will face in dealing with the sustainability of pension plans.
Underfunded pension plans are one of the fastest growing problems weighing on state and local governments. Though the pension problem existed long before the recession, the unfunded debt for government workers’ retirement benefits has seriously worsened in our economic crisis.In Orange County, our pension system has become unsustainable. Unless an alternative is adopted soon, the County of Orange will no longer be able to afford to pay the benefits that its employees have rightfully earned.
However, Californians are good at finding innovative solutions to complex problems. Here in Orange County, the Orange County Employees Association (OCEA) has made a concerted effort to work with county representatives to reform the pension program. Two years ago, OCEA and local government representatives proposed a hybrid pension plan to help the County of Orange cope with its mounting pension problem. The new plan provides a lower defined benefit which the County would offer in conjunction with participation in a defined contribution plan with an employer matching element. This hybrid plan, endorsed by many Democrats and Republicans, has stalled at implementation because of a regulatory roadblock by the U.S. Department of Treasury.
In two years, the Treasury Department has been unable to provide a time frame for issuing guidance on the impediment. With no indication that Treasury will act anytime soon, I’ve introduced legislation in Congress that would allow for the implementation of the hybrid pension plan. Orange County can no longer afford to wait to solve this problem.
My bill to allow for the implementation of Orange County’s hybrid pension plan has garnered bipartisan support from other members of the Orange County delegation, including Representatives John Campbell, Ed Royce and Ken Calvert. This month, I had the pleasure of hosting Orange County Supervisor Bill Campbell, in a meeting with the Ranking Member of the Ways and Means Committee, Sander Levin. We discussed this issue and made real progress in finding a solution, and I am confident that one is near. Reforming the pension system is an important issue for thousands of hard-working employees of Orange County and for Orange County taxpayers.
How we reform our pension system reflects how we view our teachers, police officers, first responders, and municipal employees who earn these pensions. Such workers have contributed to the system for decades and deserve to have their investments and hard work honored.The hybrid pension plan proposed by the County of Orangeand its employees will lay the framework for a national model and its implementation will take us one step closer to solving this pension crisis nationwide.
