City employees may get to retire at 55

Eron Ben-Yehuda

HUNTINGTON BEACH -- The city is offering a group of its employees greater

retirement benefits, and some worry that taxpayers may have to pick up

the tab.

About 600 city personnel are “very close” to concluding a new labor

agreement that would allow them to retire at 55 and still earn the same

percentage of income they now have to wait until they’re 60 to receive,

said Bill Osness, the city’s personnel director.

This holiday gift, estimated to cost $450,000 annually, will be paid for

by the state’s retirement system, said John Reekstin, director of

administrative services. Known as the Public Employees Retirement System

-- or PERS -- the fund is flush with cash, due mainly to a booming stock

market, he said.

As long as the economy doesn’t go “belly up,” the city won’t have to put

up a dime for these added benefits, he said.

But City Councilman Dave Sullivan wonders what will happen if the stock

market bubble bursts. The retirement system could lose so much money, it

may have to raise the rate of the contributions the city is obligated to

pay into the fund, he said.

“I think it’s eventually going to be too costly for the city,” he said.

If the city does have to pay more into the system, then the cost may be

shifted to the taxpayers, he said.

However, Reekstin said there are other ways to cover the expense.

“It doesn’t necessarily mean increased taxes,” he said. “The City Council

would have to figure out how to budget for that [added] cost.”

If the increased benefits are approved, it will be very difficult for the

city to reverse course, Osness said. But the city could renegotiate the

labor contract and reduce benefits for new employees, he said.

But some residents aren’t so sure beefing up the benefits package is the

best way to go.

If the state retirement system is doing so well, then the city should

receive a part of its taxpayer-funded contributions back, said Chuck

Scheid, a member of the city’s finance board.

“Residents can decide whether to pay for added benefits or fix potholes,”

he said.

But Reekstin said contributions have to stay in the system.

QUESTION

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