Funding Is Demanded for Hikes : Pension: L.A. panel wants the county to begin setting aside $265 million to cover new rules. It wants the liability paid off in 16 years.

The Los Angeles County Board of Investments on Wednesday demanded that the Board of Supervisors begin setting aside $265 million needed to bankroll the liberal pension rules quietly adopted last year.

Investment board members, who oversee the $13-billion county pension fund, voted unanimously to request that the county pay off the liability in 16 years--at an annual cost estimated at more than $19 million. And as long as the controversial rules remain in place, the ongoing costs will keep mounting. When those costs are factored in, the annual tab comes to more than $25 million, officials estimated on Wednesday.

Retirement Administrator Charles Conrad had recommended that the debt be paid off over 30 years, to reduce the annual financial impact on the county. But investment board members said they were concerned about the financial health of the retirement system and wanted the liability paid off sooner.

The pension rules were adopted last year at the behest of Chief Administrative Officer Richard B. Dixon and County Counsel DeWitt Clinton. But the cost was not known until April 21, when a study ordered by the County Retirement Board was completed.

Board member Marvyn E. Kaye said he was concerned that the liability could grow considerably next year as the liberal pension rules are extended to thousands of county workers who are members of Local 660 of the Service Employees International Union.

Kaye told the board that the cost of extending the benefits to the union members could exceed $100 million, but he acknowledged that his estimates were not based on actuarial studies. Conrad said it is difficult to make such projections, but said the costs will be in the tens of millions of dollars.

At the same time, two members of the County Retirement Board on Wednesday said they may consider rescinding the pension rules over the objections of the Board of Supervisors. Simon S. Russin, an employee member of the Retirement Board, said, “The charade Dixon pulled off on the taxpayers . . . is outrageous.” Russin said he will ask the Retirement Board to examine the rule changes. Dixon could not be reached Wednesday for a response.

Robert Herman, chairman of the Retirement Board, agreed that the rules need to be reviewed. But he said that while it is possible they could be rescinded, it is unlikely.

On Tuesday, the Board of Supervisors, for the third time, turned back efforts to repeal the pension rules. County attorneys have contended that the pension changes are irreversible because it is illegal to take away pension benefits retroactively.

The controversial pension rules allow benefits such as car and medical allowances to be counted with salaries in calculating retirement pay.

The rules, adopted without a vote of the supervisors or any study of their financial impact, would boost the retirement pay of some officials by 19%, to more than $125,000 a year. Although some changes will benefit most of the county’s 85,000 employees, the Board of Supervisors and top county managers will derive the largest gains in retirement income.

Two taxpayer groups have sued the county to repeal the pension rules. On Monday, Gov. Pete Wilson signed legislation overturning a state law used by Los Angeles County officials to adopt the rules without a formal vote. The legislation repeals an obscure 1990 law that Wilson said was misinterpreted by Los Angeles County.