L.A.’s top budget official introduces two wide-ranging pension proposals

The top budget official at Los Angeles City Hall has put together two wide-ranging proposals for regaining control of pension costs, both of which would force newly hired city employees to pay more toward their retirement while receiving less generous benefits than those currently offered.

With rising pension obligations threatening to gobble up money devoted to public safety, libraries and other taxpayer services, City Administrative Officer Miguel Santana proposed a March 8 ballot measure that seeks to save $175 million over a 30-year period for every 1,000 police officers or firefighters hired.

One proposal, a copy of which was obtained by The Times, would require police and firefighters to pay 11% of their salaries toward their retirement, up from 9%. The plan also would scale back the pension benefits for those who have worked 20 or more years.

Only voters can change the benefits offered to the city’s sworn public safety employees.

A second plan drafted by Santana would require that civilian workers contribute 11% of their salaries toward retirement, up from 7%. That plan also would reduce the size of pensions for civilian employees.

All of the proposed changes would apply to newly hired workers, not those currently retired or on the city’s payroll, Santana said. Among the biggest changes would be a 50% reduction in the healthcare subsidy for civilian retirees, according to one of several union officials briefed on the plan.

Barbara Maynard, spokeswoman for the Coalition of L.A. City Unions, said her group fears that the combination of reduced benefits and higher contribution rates would force civilian city workers to retire “at a poverty level.” The proposal “really makes it difficult for them to survive in their retirement years,” said Maynard, whose group represents 20,000 employees.

Budget officials contend the measures are needed to address dramatically rising pension costs, which are expected to consume nearly one-third of the city’s general fund budget by 2015.

Santana released a separate report Friday saying that, three months into its budget year, the city already has a shortfall of nearly $64 million. That figure will grow to $117 million if the city cannot reach a deal to lease nine of its parking garages, he said.

“Until we adopt major pension reform, we will continue to face deficits year after year,” he said. “Next year we face a $320-million deficit, and half of it is from increased pension costs.”

The City Council is scheduled to consider the public safety pension ballot measure on Friday. Santana said the changes to that pension plan will make a difference more quickly than for civilians because the city continues to hire roughly 300 police officers per year, even during a major recession.

A spokesman for the Police Protective League, which represents rank-and-file officers, said his union has not seen the plan. The union sent a letter last month accusing city negotiators of failing to bargain in good faith on the pension changes.

None of the proposals would apply to employees at the Department of Water and Power, which has a separate retirement system.

The proposal for civilian employees is considerably more drastic than one offered last week by Council President Eric Garcetti. That plan includes some proposals offered by the coalition, including a ban on the practice of “double dipping” — working as a civilian city employee while receiving a public safety pension.

Councilman Richard Alarcon said Santana failed to address that issue and should have looked more closely at alternatives offered by various employee unions. “We should adjust the pension compensation for the highest paid employees, as opposed to targeting the low-end workers,” he said.

The changes are designed, in part, to encourage city employees to work longer. Under the current system, a civilian city employee who earns $75,000 annually and retires at 55, after 30 years on the job, would receive $48,600 per year in retirement payments.

That amount would fall to $26,100 under the new system. However, a 30-year civilian employee who earns $75,000 but retires at age 62, after 37 years of service, would receive $55,500, according to the formulas prepared by Santana’s office.

david.zahniser@latimes.com