A labor relations panel moved Monday to strike down a 2-year-old law that rolled back retirement benefits for newly hired Los Angeles city employees, handing a defeat to the politicians who are trying to rein in growing employee pension costs.
The five-member Employee Relations Board voted unanimously to order the City Council to rescind a 2012 ordinance reducing pension benefits for employees with the Coalition of L.A. City Unions, on the grounds that the changes were not properly negotiated with labor leaders. That law, backed by Mayor Eric Garcetti when he was a councilman, was expected to cut retirement costs by up to $309 million over a decade and by up to $4.3 billion over 30 years, according to city analysts.
Ellen Greenstone, a lawyer for the labor coalition, described the vote as a "huge, big deal," one that shows that the city cannot unilaterally impose pension changes on its workforce. Coalition Chairwoman Cheryl Parisi said in a statement that the reduction in benefits, which included a hike in the employee retirement age from 60 to 65, had devalued middle-class city workers.
"It's appalling that city officials continue to try to make city workers pay for the city's bad financial decisions," said Parisi, whose group represents clerks, gardeners, custodians, mechanics and other city employees who are not police officers, firefighters or employees of the Department of Water and Power.
The city's retirement costs have been steadily climbing in recent years, consuming money that would have otherwise paid for basic services, such as street and sidewalk repairs. The yearly payout for the retirement benefits of all employees, including police officers and firefighters, is expected to grow next year by $80 million, from $1.036 billion to $1.116 billion, according to a budget memo released in April.
Garcetti said through a spokesman that he disagreed with the board's decision and would pursue a legal challenge to overturn it in the courts. City Administrative Officer Miguel Santana, a high-level budget advisor, said the 2012 cuts had been a critical part of "bringing the city back to fiscal stability."
"The city believes that the board has exceeded their authority and is exploring all options," he said.
The Employee Relations Board is a quasi-judicial body that reviews complaints from unions, managers and individual employees at City Hall. Under the city's labor ordinance, the panel has the power to invalidate decisions by the council, said the board's executive director, Robert Bergeson. If council members do not agree with Monday's decision, they can file suit to have a court overturn it, he said.
Rob Wilcox, a spokesman for City Atty. Mike Feuer, said lawyers were "moving on a number of fronts" to preserve the 2012 ordinance. Attorneys will ask the Court of Appeal to reverse Monday's decision, Wilcox said, by arguing that the board erred in its decision and that the labor coalition missed the deadline for filing its challenge to the pension ordinance.
The council voted two years ago to roll back benefits for new civilian hires, just as former Mayor Richard Riordan was putting together a ballot measure that proposed cutting pension benefits for every city employee. Riordan's effort ultimately fizzled, but the council succeeded in paring pension benefits and boosting the retirement age.
At the time of the vote, city officials said reductions in retirement benefits for employees who had not yet been hired did not need to be negotiated. Garcetti relied on that argument during his campaign for mayor, but his opponent, then-City Controller Wendy Greuel, said the city should have accomplished any pension savings by bargaining with its employee unions.
The pension cuts went into effect for coalition workers hired on or after July 1, 2013.
The city's yearly payout for retirement costs for civilian employees have grown from $260 million in 2005 to an estimated $410 million this year, according to a recent budget report. The cost is expected to keep growing, reaching $469 million in 2016.
The battle over civilian pension benefits comes as Garcetti is trying to negotiate a new contract with the police officers' union. Rank-and-file officers recently rejected a deal that would have provided raises to only a fraction of the union's members.
City negotiators say they need to hold the line on raises, in part, to keep pension costs under control. Hundreds of officers are expected to show up at City Hall on Tuesday to protest what they described as low pay and other issues.