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City Council Delays Vote On LA Pension Reform

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(credit: Frazer Harrison/Getty Images)

(credit: Frazer Harrison/Getty Images)

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LOS ANGELES (CBS) — The Los Angeles City Council postponed voting Friday on whether to ask voters to scale back the pensions of future Los Angeles police officers and firefighters.

The council heard a report from the actuary who studied the proposed ballot measure, then decided to wait until Tuesday to vote. The council has until Nov. 3 to approve the measure for placement on the March 8 ballot.

City Council President Eric Garcetti urged his colleagues to support the initiative, saying “We stick to the numbers, and an actuary who is bound by law to do analysis not based on politics but based on numbers actually showed that when pension is designed the right way, it is cheaper for the people of Los Angeles.”

According to the city’s budget analysts, pensions make up 18 percent of the city’s expenses this fiscal year, and will be double that by 2014.

State law hinders officials from reducing the pensions of existing employees, but a ballot measure can be used to scale back the retirement pay of future police officers and firefighters.

Currently, sworn personnel who retire at age 50 with 20 years of service are eligible to receive a minimum pension equivalent to 50 percent of their average salary during their final year at work.

The proposed ballot measure — unveiled by Mayor Antonio Villaraigosa on Monday — would reduce their pension to 40 percent of their average salary over their last two years of employment.

Both plans allow a maximum pension of 90 percent after 33 years of service. However, sworn personnel would reach that milestone at a slower pace under Villaraigosa’s plan.

A police officer or firefighter currently can receive a pension of 65 percent after 25 years, and 80 percent after 30 years. Under the proposed ballot measure, they would instead earn a 55 percent pension after 25 years; and 75 percent after 30 years.

City Administrative Officer Miguel Santana explained on Monday, “We are rewarding employees … to work longer, and we’re penalizing employees who decide to retire at a younger age.

“The expected savings under this plan for the next 10 years is approximately $120 million — it’s a 20 percent reduction of what our pension costs are today,” he added.

Villaraigosa’s plan would also require sworn personnel to contribute 2 percent of their salary toward their post-retirement healthcare. Currently, they contribute 9 percent toward their pension, but nothing toward their healthcare after leaving the force.

If approved by voters, the ballot measure would apply to police officers and firefighters hired after next August.

But a group of civic and business leaders — including the heads of the Los Angeles Chamber of Commerce, Los Angeles Urban League, Los Angeles County Business Federation, Alliance for a Better Community and United Way of Greater Los Angeles — want even more drastic changes in retirement benefits.

They called for increasing the minimum retirement age to 65 for civilians and 55 for police officers and firefighters; reducing pension payments; requiring employees to help pay for their healthcare after retirement; setting a cap on cost-of-living increases; and basing pension
payments on the employee’s average salary during his or her last three years at work.

(©2010 CBS Local Media, a division of CBS Radio Inc. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed. Wire services contributed to this report.)

CNS-10-22-2010 12:07

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