Private firms offer to run state retirement plan

Source: Ed Mendel, Calpensions, November 2, 2015

A board working on a proposal to enroll most small business employees in a state-run retirement savings plan, unless they opt out, was told last week that small technology-focused financial firms could do the job. The founders of three firms that offer 401(k)s and other retirement plans to small businesses did not object to competition from the state. They offered their services, acknowledging that several small firms may be needed due to the size of the job. … The Secure Choice program was created to provide a job-based retirement savings plan for about 6.3 million California workers without access to one. Only 45 percent of workers age 25 to 64 have an employer plan, less than the 53 percent national average.


Editorial: Consider privatizing services
Source: Press-Enterprise, July 30, 2015

With local government budgets set, it is time for all city and county governments to evaluate what services they provide in-house and, at the very least, consider alternative means of providing services. In a problem seen throughout the state, local governments in the Inland Empire are all too often faced with the specter of rising expenditures and lagging revenues. And as public safety costs and pension contributions escalate, options are running out. … For example, a report released by the Manhattan Institute in April, entitled “California Crowd-Out: How Rising Retirement Benefit Costs Threaten Municipal Services,” discussed how the rapid growth of public employee retirement costs imperils the provision of services. With greater portions of budgets devoted to pensions alone, there is less room for actual, tangible service delivery.

Referenced Report:
California Crowd-Out: How Rising Retirement Benefit Costs Threaten Municipal Services
Source: Stephen D. Eide, Manhattan Institute, Civic Report No. 98, April 2015

Executive Summary: In recent years, California municipalities have seen retirement benefit costs grow at a rate above that of taxes, fees, and charges. “Crowd-out” is the term given to this condition by some public officials forced to deal with the resulting fiscal strain. Balanced budget requirements mandate that when costs grow more rapidly than revenues, something must give. All too often, this has meant reductions in core government services, most of which—police, fire, libraries, parks, and street and sidewalk maintenance—are delivered at the local level in California. Retirement benefit costs have caused California localities to underfund basic infrastructure maintenance needs, even in affluent areas such as Sonoma County. Teachers in Los Angeles are threatening to strike over stalemated contract negotiations, as the school district has found itself unable to satisfy union demands for increased personnel and salaries, as well as its long-term benefit commitments. This paper takes a broad look at California crowd-out, documenting the phenomenon across the local government sector. It will compare rates of growth between revenues and retirement costs and examine workforce levels, salary trends, infrastructure spending, and other service indicators.