L.A. council members propose measures to curb spiraling pension costs

Worried about spiraling pension costs, seven members of the Los Angeles City Council called Friday for reductions in the benefits given to civilian workers and an increase in the retirement age from 55 to at least 60.

The proposal, which could come up for a vote within two weeks, calls for most civilian city workers to contribute 2% of their salaries to pay for the healthcare provided to retired employees. Currently they pay nothing for that benefit, city officials said.

The decrease in benefits would apply only to new hires, not existing employees. At least one council member feared the proposal would not go far enough to address the problem, since the financial crisis has brought the recruitment of new civilian employees to a halt.

“We’re not even hiring anymore; it’s purely hypothetical,” said Councilman Bill Rosendahl, who put in a separate request Friday for an examination of a larger rollback in benefits, including a move to make 65 the retirement age for newly-hired workers.

The city’s financial advisors said two months ago that retirement costs were increasing at such a rapid pace that they could consume nearly one-third of the city’s general fund by 2015, reducing the taxpayer dollars available for public safety, parks and other basic services.

Even though hiring has slowed, Council President Eric Garcetti said his proposal would have a significant effect on the budget because a large number of city employees are scheduled to retire over the next decade.

“If you look at the average age of most of our city employees, we’re going to have massive retirements in the next five to 10 years,” he said. “So we will absolutely be hiring, even if we’re not expanding the overall size of government.”

The proposed changes would not apply to some civilian workers, including those in the Department of Water and Power, which has its own pension system.

Garcetti’s proposal received support from council members Rosendahl, Greig Smith, Bernard C. Parks, Janice Hahn, Tom LaBonge and Dennis Zine. Still, the city’s top budget analyst said that any plan that focuses only on newly hired workers would not solve the immediate crisis.

City Administrative Officer Miguel Santana said more aggressive measures would be needed, such as limiting the size of civilian pensions to no more than 75% of a worker’s highest salary.

The Coalition of L.A. City Unions, which represents roughly 20,000 city employees, said the council would need to enter into talks with the unions and warned that benefits cannot be changed simply by passing an ordinance. Still, coalition spokeswoman Barbara Maynard said her organization would be willing to negotiate over each item proposed by Garcetti.

“We don’t have major objections,” Maynard said. “We have to see what some of these ideas mean in terms of the cost, and the savings to the pension fund, and we need to talk to the members to see how they feel about it.”

Mayor Antonio Villaraigosa and council members also are laying plans for a March ballot measure that would scale back the size of retirement benefits for newly hired police officers and firefighters. Those changes cannot be made without voter approval.

Garcetti announced his proposal just as state lawmakers approved a bill to curtail pension benefits for newly-hired state workers. Under that bill, some civilian employees would have to wait until age 60, not the current target of 55, if they want to receive a pension equal to 2% of their highest salary, multiplied by the number of years they have worked.

Prison guards and police officers at state colleges currently are eligible to receive, at age 50, a pension equivalent to 3% of their highest annual salary, multiplied by the number of years on the job, a state budget official said. The state pension plan increases the age to 55 and lowers the pension formula to 2.5% for newly hired prison guards and college police, the official said.

david.zahniser@latimes.com