City employees can retire at 55 with greater benefits

Eron Ben-Yehuda

HUNTINGTON BEACH -- Despite warnings of a “financial time bomb,” the City

Council on Monday approved giving some of its employees greater

retirement benefits.

By its 6-1 vote (Councilman Dave Sullivan dissenting), the council has

given the green light for about 600 city employees to retire at 55 and

still earn the same percentage of income the previous package made

available to them at the age of 60, said Bill Osness, the city’s

personnel director. This new year’s gift, estimated to cost $450,000

annually, will be paid by the state out of its Public Employees

Retirement System funds, said John Reekstin, director of administrative

services for the city. Because of a booming stock market, the fund has

been pumped with cash, 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, Osness said.

But if the stock market bubble bursts, Sullivan said he is concerned the

retirement system could lose a lot of money -- so much that it may have

to raise the rate of the city’s contribution to the fund.

“It’s a financial time bomb 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.”

It will be very difficult for the city to change its mind about the

increased benefits for current employees, Osness said. But the next time

there are labor negotiations, the city could demand reducing benefits for

new employees, he said.

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

EARLY RETIREMENT?

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