On Friday, California state legislators passed a reform measure that is expected to put new limits on pensions for future state and local government employees, saving billions of dollars in retirement spending.
The bill, AB340, passed 49-8 in the Assembly and 38-1 in the state Senate.
Brought forward by Governor Jerry Brown on Tuesday, the new law - if signed by Brown - could cut $40 billion to $60 billion in pension expenses for government employers over the next 30 years, according to the California Public Employees' Retirement System (CalPERS), the largest public pension fund in the United States.
According to the Huffington Post, the legislation will increase the retirement age for new employees, cap the annual payout at $132,120, eliminate numerous abuses of the system and require workers who are not contributing half of their retirement costs to pay more.
State and local governments have been struggling to meet the demands of long-held pension promises to retirees while their abilities to pay shrink.
Public employee unions are unhappy about the agreement, and complained that Democrats who normally support their causes in Sacramento had abandoned them.
Others felt the legislation did not go far enough.
"I hope people acknowledge there is much, much more work to be done," said Joe Nation, a former Democratic member of the state Assembly who now teaches public policy at Stanford University in an interview with Reuters. "It's better than moving backwards but this barely moves the ball forward."
Nation in recent years has overseen studies warning California and its local governments face unfunded pension liabilities that stretch into the hundreds of billions of dollars.
Pension costs contributed to the bankruptcy filings of Stockton and San Bernardino this year.
"Because we are so under water right now there just really has to be more," Nation told Reuters.
What do you think? Will this reform measure being sent to Governor Brown help the economies of our state and our cities? Should there be a cap on the amount a person can earn from a pension?
Let us know in your comments.