Commission warns new hires can't solve pension problem

March 2, 2011 6:47:22 PM PST
The state of California is steaming toward a financial iceberg unless we change course. That's the gist of a new report out about the growing cost of pensions for state workers.

A citizen oversight commission says the state can no longer look to new hires as a way to solve the pension problem. It's recommending that benefits be changed for current state workers for their time remaining on the job before retirement.

The Little Hoover Commission's Executive Director defended its report to the Legislature that warns the public pension systems face soaring liabilities and will become unsustainable in the future. So much so, taxpayers will have to be asked to live with fewer government services in order to meet pension obligations. The commission estimates unfunded liabilities are $240 billion.

"The commission feels that we've lost a sense of purpose of public pensions. They started out as a way to provide old age security and they've become a vehicle for wealth accumulation," said Stuart Drown from the Little Hoover Commission.

The problem has become so bad the commission is suggesting a drastic move: cutting or freezing the benefits of current government workers. But Democrats, whose core constituents include public employee unions, were cool to the idea, especially since contracts are in place.

"To reopen those unilaterally also raises legal and constitutional red flags," said St. Sen. Alex Padilla, D-Los Angeles.

"Most of these have to be dealt with at the bargaining table," answered Drown.

Talk of touching the pensions of current workers strikes a nerve among union members, who say it's not right to change the game mid-stream after putting in years of service.

"I feel it's wrong because what it's doing is balancing the budget on the backs of the working people, the working class," said Richard Godina, a state worker.

Public employee labor unions point out they've already agreed to numerous give backs, which last year totaled $400 million and that benefits are hardly generous.

"Our members retire, on average, at $2,500 a month. I hardly think that meets the standard of wealth anywhere," said Terry Brennand from SEIU.

The Hoover Commission is also warning that the problem is worse at the city and county level, and that drastic changes need to be made there too.

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