By Jon Ortiz
jortiz@sacbee.com
Published: Thursday, Mar. 3, 2011 – 12:00 am | Page 3A

Lawmakers on Wednesday reacted skeptically to a controversial new proposal to lower public employee pensions throughout state and local government.

“Frankly, I just don’t see this happening,” said Sen. Alex Padilla during a joint meeting of Assembly and Senate committees that oversee public employee compensation.

The Los Angeles Democrat was referencing a week-old report by the bipartisan Little Hoover Commission that calls for radical changes to public pensions to keep them from “crushing” government.

The commission’s most controversial – and legally uncertain – suggestion would let state and local officials unilaterally freeze current employees’ pension benefits and then reduce pension credit earned for future years on the job.

Until now, even outspoken pension-change advocates such as former Gov. Arnold Schwarzenegger and defeated GOP gubernatorial candidate Meg Whitman have believed that the law protects benefits granted from the beginning of a government worker’s public service.

But the crisis is so dire and growing so quickly, the Little Hoover report says, that government can’t wait for decades for a lower pension benefits for newly hired workers to take hold. It needs to cut what it pays for current employees. Current retirees’ benefits would remain untouched.

Little Hoover’s report acknowledged that moving current workers into a new pension plan would trigger lawsuits, but it didn’t predict which way the courts would rule.

“The commission made a policy analysis, not a legal analysis,” Stuart Drown, the commission’s executive director, said during the Wednesday hearing. The conclusions were based on nearly a year of research and testimony from a wide variety of pension experts and interest group representatives.

“Well, while we appreciate (the report), policy recommendation without legal analysis doesn’t always do us a whole lot of good,” Padilla said.

Usually the joint hearing is a little-noticed annual primer on civil service issues for members of the Assembly Public Employees, Retirement and Social Security Committee and the Senate Public Employment and Retirement Committee.

But with the Little Hoover report on Wednesday’s agenda, the hearing chamber was packed and an overflow crowd spilled into the hallway.

“We’re not just a lounge act any more,” said Assemblyman Warren Furutani, D-Gardena, who chaired Wednesday’s hearing.

Public pension officials took turns criticizing the commission’s pension-change idea.

Jack Ehnes, CEO of the California State Teachers’ Retirement System, called the proposal a “meaningless recommendation” that “punts policy to the courts.”

Anne Stausboll, chief executive of the California Public Employees’ Retirement System, said pension change is already happening.

“There’s been a significant rollback of benefits” in contracts negotiated with several state unions last year, she said, including increases in what current employees pay toward their pensions.

Union representatives who were invited to speak to lawmakers also pounced on the Little Hoover report.

“It’s unwarranted and unfair,” said Labor Coalition Executive Director Dave Low, especially because many unions have made concessions at the bargaining table.

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