California’s public pension system is abused, bloated and based on faulty math, and state lawmakers should take immediate steps to reduce the retirement benefits of current employees, not just new hires, the Little Hoover Commission says.
“The situation is dire,” the study said, adding that public employers should be permitted to make the same sorts of cuts that those in the private sector have done.
The commission’s report, which reflects proposals already floated by some Republican lawmakers and even the governor, is all but certain to intensify the political debate over California’s $25.4 billion budget shortage.
A piece of that discussion is to cut pension costs to save the state money. Republicans have proposed overhauling and downsizing the system – including one bill to remove public pensions from collective bargaining.
The Little Hoover Commission, set up nearly 50 years ago to probe state government and recommend improvements, has released numerous studies over the years on government operations.
But rarely has the timing of its reports been so crucial: Pension changes recommended in the study, at least in part, are certain to find their way into the larger dispute over resolving the budget deficit.
Democrats control the Legislature but lack the two-thirds votes to approve new taxes.
Gov. Brown, a Democrat, has proposed a mix of tax and cuts – a mix that has riled fellow Democrats who oppose the cuts and Republicans who oppose the taxes.
The pension issues “cannot be solved without addressing the pension liabilities of current employees. The state and local governments need the authority to restructure future, unearned retirement benefits for their employees. The Legislature should pass legislation giving this explicit authority to state and local government agencies,” the report noted.