A five-member panel that handles labor complaints at Los Angeles City Hall handed a stinging defeat to the city's political leaders on Monday, voting to strike down Los Angeles' bid to rein in retirement costs for civilian employees.
The Employee Relations Board voted unanimously Monday to order the City Council to rescind a 2012 law scaling back pension benefits for new employees of the Coalition of L.A. City Unions, on the grounds that the changes were not properly negotiated. 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, according to city analysts.
Ellen Greenstone, a lawyer for the labor coalition, described the vote as a “huge, big deal” -- one that shows the city could not unilaterally impose changes in pension benefits 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, “devalues middle-class city workers and their dedication to serving the residents of Los Angeles.
"It's appalling that city officials continue to try to make city workers pay for the city's bad financial decisions," Parisi said in a prepared statement.
Garcetti is on vacation and his spokesman has refused to say where he is. A lawyer in City Atty. Mike Feuer's office could not immediately say how the city would respond. 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 will explore all of its options," he said.
The city’s labor board is a quasi-judicial body that reviews complaints from unions, managers and individual employees. 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 legal paperwork seeking to have a judge overturn it, Bergeson said.
City officials have previously argued that changes in the retirement benefits of future employees do not need to be negotiated. The 2012 law rolling back benefits applied only to employees hired after July 1, 2013. Budget officials had hoped that the reductions would trim the city's retirement costs by more than $4 billion over a 30-year period.
The board’s decision comes as the city's contributions for civilian employee retirement costs have climbed from $260 million in 2005 to an estimated $410 million this year, according to a recent budget report.
Garcetti and council members could now find themselves attempting to negotiate cuts in pension costs at the same time they are also trying to reach salary agreements with coalition representatives. The city has been trying to keep a lid on raises -- yet another strategy for containing growing retirement costs.
The coalition's contract expired on July 1.
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