Legislature debates pension reform

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A Senate committee heard testimony Monday on a measure that would dramatically change the state’s public pension system.

The bill, SB 919 by Senate Republican leader Dennis Hollingsworth of Murrieta, seeks a wide range of changes including increasing the retirement age from 55 to 65 for many state employees and demanding higher contributions from employees to their retirement accounts.

Although key pieces of the bill faced some opposition from Democrats in the Senate Public Employees and Retirement Committee on Monday, the issue of pension reform is likely to become a major issue in this summer’s budget discussions.

The measure remains controversial, but there appeared to be more bipartisan agreement on portions of the bill, including efforts to curb the practice known as pension spiking, when employees receive a one-year salary increase near the end of their employment in order to boost their lifetime pension payouts.

Hollingsworth’s bill would base a lifetime pension payout on a three-year average of an employee’s highest salaries.

The measure received a boost from testimony from David Crane, senior adviser to Gov. Arnold Schwarzenegger, who said the bill ‘would appear to be an excellent move in the direction of reducing pension promises to new employees.’

Crane said the state’s current pension obligation is untenable and pointed the finger at a 1999 proposal, pushed by CalPERS, that ‘advocated large and retroactive pension increases for active and new employees without requiring an increase in upfront contributions’ from workers.

‘In 1999 ... the Legislature passed SB 400, a proposal which makes even Goldman Sachs’ alleged non-disclosure look like child’s play,’ Crane said.

Crane warned that growing state pension obligations put other state programs at risk. ‘One cannot both be a progressive and opposed to pension reform,’ Crane said.

Sen. Denise Moreno Ducheny (D-San Diego), took issue with Crane’s testimony, saying much of the state’s pension problem was a result of Schwarzenegger not having engaged in bargaining with unions representing state workers.

Schwarzenegger spokesman Aaron McLear said the governor has not formally endorsed Hollingsworth’s bill but ‘wants to work with the Legislature and the unions to reform the state’s pension system.’

-- Anthony York