SACRAMENTO, Calif. (AP) — Democratic lawmakers on Wednesday criticized a watchdog organization’s recommendation that California freeze pension benefits for current state and local government workers as the only way to swiftly rein in runaway liabilities that are threatening basic government services.

Stuart Drown, executive director of the Little Hoover Commission, told a legislative hearing that California’s public pension systems face soaring liabilities as baby boomers retire and live longer. The commission said obligations to retirees will become unsustainable in the future.

The commission made its recommendation in a report last week just as public employee benefits became a flashpoint in statehouses nationwide. Republican lawmakers in California said the state must address the long-term problem as it deals with a $26.6 billion budget deficit.

Democrats, who control both legislative houses and generally support public employee unions, said the commission’s proposal to cut existing workers’ benefits faces such legal hurdles that it likely is not worth pursuing.

Sen. Alex Padilla, D-Los Angeles, chided commissioners for presenting a solution that “raises legal and constitutional red flags.”

“Frankly, I just don’t see some of your recommendations happening in the Legislature this year,” Padilla told Drown. “I think the only wiggle room may be on the future employee side.”

The commission, which is made up of lawmakers and political appointees, said the state should switch from its current defined-benefit plan to a hybrid model that would include something similar to the 401(k) plans offered to most private-sector employees.

California had at least $115 billion in unfunded pension obligations as of June 30, 2009, according to the latest figures available from the California Public Employees Retirement System. Unfunded state retiree health care costs were nearly $52 billion, according to the state controller’s office.

Drown told lawmakers that without swift and sweeping changes, the state, along with cities and counties, will soon have to reduce more services and lay off employees to pay for rising pension costs.

“Pension liabilities will continue to soar in California as more baby boomers continue to retire from public service,” Drown warned. “Benefits at this point are too generous.”

The state and many local governments have set up two-tiered pension systems that give lesser benefits to new employees. But Drown said that will not save money fast enough. He agreed that the commission’s keystone recommendation targeting existing workers’ pensions likely would be tested in the courts.

“That is clearly the most controversial recommendation. The commission did not make it lightly,” he said.

Labor lawyers said the courts have consistently ruled it is illegal to reduce future pension benefits already promised to current workers.

Representatives of public employee unions told the joint hearing of the Assembly Public Employees, Retirement and Social Security Committee and the Senate Public Employment and Retirement Committee that they will sue if the Legislature tries to change their defined-benefit plans.

Under current law, any changes to existing pensions may need to come through collective bargaining negotiations, Assemblyman Allan Mansoor, R-Costa Mesa, said in an interview after the hearing. Mansoor has announced legislation that would eliminate collective bargaining for pension benefits by public employees.

“No one denies that we do have a problem and this has to be addressed in a complete reform manner,” Mansoor said. “You can’t just do bits and pieces and get us where we need to go.”

Also Wednesday, the controller’s office warned the governor and legislative leaders that if they do not enact a budget by July 1, the state would likely face another round of IOUs, delayed payments and more credit rating downgrades. Democratic Controller John Chiang urged lawmakers to compromise.

“Unless we make the tough decisions necessary to stabilize the state’s fiscal health, I fear that the next four years will be sustained by chronic fiscal distress and regret over lost opportunities,” Chiang wrote.

(Copyright 2011 by The Associated Press.  All Rights Reserved.)

Comments (34)
  1. Rick says:

    The car is going off the cliff but the politicians can’t see the problem because they are looking in the backseat. In a perfect world all the commitments promised by the government would br met. Lets stop sticking our heads in the sand and work for a solution that will keep the system from total failure.

  2. skinner says:

    LISTEN UP LAW MAKERS – how about if you take a cut in pay, start paying for your benifits. You make the rest of poor working saps do it, why not you!!!!

    1. Paulette Trout says:


  3. modesto209 says:

    skinner, government jobs hire and employ the best and brightest, that’s why.. maybe the rest like you do’t fall in that catagory..

    1. DemsRDumb says:

      Dems are as bright as a black hole, and so is any of their budjet plans. As for modesto209; just admitting that your from modesto, makes you a brainless moron. As for you saying that government jobs hire and employ the best and brightest is evidence that your brainless.

  4. DemsRDumb says:

    Leave it to demon-crats to whine. They 1st try to get others to do their jobs for them, then they want bigger pensions when they think they deserve to retire. You see, dems go into office trying to get rich off of everyone else, and leave office millionaires, while Repubs go into office ALREADY rich.

    1. letta says:

      What is your problem, what city are you from? What city doesn’t have their problems? Are you a racist, sure sounds like it? Republicans want to stay rich, they don’t give a darn about the working people, that pays their salary. Lets just ask all the lawmakers to give up their pensions, health benefits and all their perks. Like to see their respond?

      1. DemsRDumb&letta says:

        My problem is you dumb idiots who dont do your dam homework. NO i am NOT a racist, but i do know that it takes one to accuse one. If you were rich, you wouldn’t give up your fortune for someone who wont work as hard as the person who DOES have the money in the bank. & as for asking the lawmakers to give up their pensions, health benifits, and all their perks. We all know that they won’t because they get that without the deductions from their checks, so they would end up having to pay it out of pocket like the rest of us. So the next time you ask if someone has a problem, take a look into your mirror. It’s evidence right in front of you. One more thing,,, GET A JOB & EARN YOUR OWN DAM MONEY. Keep your skanky hands out of my wallet.

      2. letta says:

        (DemsRDumb???) I have my own money and I worked hard for it. Who said I was a dems? Get your facts right? The name calling shows your IQ 🙂

  5. frank says:

    so why does calpers still allow employees to purchases 5 service years?

    1. Kat Reese says:

      They don’t.

    2. Kat Reese says:

      Also when they did allow it, it was so very expensive that only a very few could afford it.

  6. Mike DuBois says:

    Modesto 209- Best and brightest? Then how come we are in this mess? And Frank, what’s the problem with the employees buying time with their own money? The payout is similar to buying a annuity for the same money. It goes into a pension fund and earns the payout as it goes.

  7. sandySandi says:

    Pay attention to the Democrats. Governor Brown does not want to address the problem of the amount of money it is costing us for the retirement system because he would be picking his own pocket. Just think, Governor, Governor, Mayor of Oakland and Attorney General and now Governor again.

    1. Kat Reese says:

      Maybe you ought to do a little research about Brown’s pension before you shoot off your mouth about something you obviously don’t know squat about.

  8. CaliRedSoxFan says:

    This state better get it’s house in order because we will not see any Federal help. After the last election a senator or congressman would be committing suicide sending money from fiscally responsible states out here to pay for our liberal extravagances. How about before we start cutting money from schools, pensions or police we cut off all funding for Illegals.

  9. Green Genius says:


    1. tim says:

      You must have moss in your head! because the Unions have runied CA.

      1. Kat Reese says:

        If that isn’t the pot calling the kettle black, I don’t know what is! Green Genius is correct. It is Wall Street, the Koch brothers & the rest of the filthy rich Republicans who caused this mess.

      2. letta says:

        This started with bad mortgage loans. Government was collecting loads of property taxes when the housing market was up and they were not saving for a rainy day. Now everyone is pointing fingers at each other. Unions did not make these loans, so how do you figure they have ruined California?
        People are losing their jobs and in turn can not pay their bills, including their mortgages.
        Lawmakers need to reduce their pensions, health benefits, salaries and do away with their perks. Are they tighting their belts? Good, lets all just quit our jobs and lets see where all these lawmakers going to get the cash for their salaries and their perks?

  10. mark says:

    What did you think the democrats would do? The Unions own the Democrats! We will never get our finances in order because the Democrats are worthless cowards

  11. Victor L. Bellini says:

    Maybe the elected Democrate would like to cut their salaries and eliminate their perks. Otherwise SHUT UP!

    1. letta says:

      This includes republicans, etc

  12. OlDog says:

    If and when our state & local governments hire the “best and brightest”, most soon learn to follow the featherbedding work rules, and hold tight to hire-through-retire job security, and annual increases regardless of performance levels. ‘Tis a wonderful deal for the few who “own” it–not so good for the large majority of us who must support them.
    Most of our government employees are vastly overcompensated for what they do, and underworked compared with private sector worker. For many businesses and individuals, leaving CA is the best option for economic survival and growth.

    1. Kat Reese says:

      If you feel that way, then why haven’t you taken a state exam & gotten yourself one of those “vastly overcompensated” jobs?? Not qualified, right??

      1. OlDog says:

        I done better den dat with my MBA, Kat. Retired, and tax-tired. Good luck, gal.

    2. GreenEnergyfor Cali says:

      I wonder…does everyone think the correction officers guarding the prisons get overcompensated? These law enforcement officers are in constant danger and yet their pay and benefits are literally the first to get hit by BOTH sides of government….AND…they are extremely overworked! Now there are a small percentage of officers that rape the taxpayers, that is a given with state employees. But for the rest of them, they often take the brunt of fiscal punishment.

      1. letta says:

        I know this to be true. Officers get spit on cursed, threats of being sued, knifed, shot at and get physical abused. No I am not a officer, but I know a few of them. You couldn’t pay me enough to do these very stressful jobs. the criminals have mor rights than the officers?.

  13. JJ42JJY says:

    I think this report is bogus because it is based on the unfunded liability for June 2009. That was close to the lowest point of the market decline. I guess that today the unfunded liability is closer to 60 billion. That still sounds like a lot but I believe that it means the fund would be short 60 billion if everybody retired today, which of course won’t happen.

    My question is “How much of an unfunded liability should be expected for a fund the size of CalPers?”

  14. Jim from Long Beach says:

    Isn’t it a bit ironic that this very emotional debate is based upon only subjective arguments that fail to analyze critical comprehensive factual quantitative data as a foundation for sensible future polcy.

  15. Smith says:

    FIRST the Lawmakers (The Clowns)… if you are all RICH and millionaires; most of you are.. then STOP claiming a paycheck and all the FREE benefits!. SECOND just quit…. you do not do your jobs anyways.

  16. smith says:

    MR Governor! Take a look at all the Commissions or Committees or whatever, many serve no purpose, or haven’t for along time, many have directors or overseeers who make a huge salary. Look at many of the STATE EMPLOYEES, many stand around and talk most of the day…. at least they do in MY OFFICE.

  17. Carmichael Craig says:

    No public employee deserves a pension over $50,000 a year….

    A simple solution would be to tax all public pensions over $50,000 at 95%….

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