Legislation signed by Gov. Jerry Brown this week that would require new public employees to work longer before retiring with full benefits, while at the same time requiring them to eventually cover at least half of the contribution to their retirement plan, is expected to save Burbank and Glendale thousands of dollars per worker.
The law, signed by Brown on Wednesday, also caps benefits for the highest earners and was meant to scale back the public cost of paying into the California Public Employees’ Retirement System to the tune of up to $55 billion over the next three decades, according to the governor’s office.
The legislation, which marks the largest roll-back of public pensions in the history of California, has the city of Burbank deferring hiring for some open positions until January to tap into those savings.
“It’s safe to say thousands of dollars per employee per year for the entire length of their career can be saved if we’re able to defer the hiring,” said Burbank City Manager Michael Flad.
The law will only affect new city employees, not those currently enrolled in CalPERS. Flad will consider deferring about 30 or 40 positions of the 125 open on a case-by-case basis.
The remaining positions are either being filled from within existing ranks or by current employees already paying into CalPERS system. Other positions are temporary, or have already been filled.
Despite the savings gained by the new legislation, Flad said the roll-backs likely will put local agencies at a recruiting disadvantage.
“You can’t just roll back benefits which have been competitively designed … without there being some type of reaction to that,” he said.
Even now, Burbank has trouble filling some city positions, such as engineers and water-system operators, he said.
“There’s going to be push-back from the labor market in terms of our inability to get quality applicants for some of these positions,” Flad added.
Glendale has already implemented some cost-saving measures similar to those featured in the state plan, so officials there won’t temporarily put off hiring, said city spokesman Tom Lorenz.
“We don’t have to wait for that to come,” Lorenz said, referring to when state pension reform takes effect. “We’re ahead of the game.”
Glendale already has decreased retirement benefits for new hires, and employees pay more than half of their pension costs — two tenets of the pension reform bill.
Glendale has a few public safety positions open that it plans to fill soon, Lorenz said. The city cut 127 non-safety personnel through retirements and layoffs in the wake of a $15.4-million budget gap, but it may have to refill some of those open spots if it finds that it can’t do more with less.
However, many of those new hires may be part-time, lifting the benefit burden. Pension and medical benefit liabilities have been front-and-center during City Hall finance discussions over the past several years.
Burbank Mayor Dave Golonski recommended that Flad defer hiring for positions that don’t have a strong justification to fill immediately.
Last year, Burbank cut two firefighter positions and two school resource officers.
“We still have budget cuts to make next year,” Flad said. “Every dollar we can save now is a dollar less we’ll have to cut next year.”