Study Critical of Supervisors on Pension Plan

A draft of a long-awaited report on Los Angeles County’s controversial pension program--which the Board of Supervisors has delayed acting on until after the Nov. 3 election--has concluded that the supervisors failed to control bureaucrats who spent $265 million on extraordinary retirement benefits.

The study by the board-appointed Citizens Economy and Efficiency Commission found that the county was not obligated to provide the lucrative benefits and added that the program is neither effective nor essential to the retirement plan.

The report, in its final phase but requiring approval of the full commission, recommends that the Board of Supervisors move immediately to freeze the most costly of the controversial pension benefits and eliminate others.

“Effective action on this issue would significantly enhance public confidence in the judgment of the Board of Supervisors,” according to the draft obtained by The Times.

The pension rules--condemned in an earlier study by the Los Angeles County Grand Jury as “the height of fiscal irresponsibility”--have become a central issue in Supervisor Deane Dana’s reelection bid. On Tuesday, Dana voted with the board majority to give the commission until after the Nov. 3 election to complete its report.

Supervisor Gloria Molina, who has led the fight against the pension program, asked that the commission complete its work within the week.

Dana, who had steadfastly defended the unusual pension rules after their disclosure by The Times this year, has recently attempted to change his position. In campaign literature, he claims to be “leading the fight against obscene pension spiking.”

On Wednesday, Dana, through a spokesman, said: “It is more important that the final report be thorough” than completed quickly.

His challenger, Rolling Hills Mayor Gordana Swanson, said: “This election year conversion to good government has now been exposed as the cynical political ploy and transparent fraud that it is.”

As reported earlier, county officials--without a vote of the Board of Supervisors or study of financial impact--implemented new rules in the pension program that boosted the retirement pay of senior officials 19%.

Under the rules, the value of fringe benefits, such as medical insurance, are included as income for calculating pension benefits. Some officials will receive retirement pay in excess of their salaries. Chief Administrative Officer Richard B. Dixon, a county employee for 33 years, would receive an annual pension of at least $127,236--about a $25,000 increase in his benefits because of changes he implemented.

The commission, a panel of 21 citizens appointed by the Board of Supervisors to examine county government, was directed in March to conduct a study of the county’s policies and practices on retirement benefits, after disclosures that the huge increases had been quietly approved by bureaucrats who would stand to benefit from them.

Louise Frankel, a Tarzana homeowners activist who serves on the commission’s pension task force, said she expects the findings contained in the report to be approved by her panel and forwarded to the full commission.

“I was so outraged about it,” Frankel said. But, she added, some commission members are “uptight” about “spanking the board.”

After eight months of study, aided by the consulting firm of W. F. Corroon, the commission found that the pension increases “came about as an unintended side effect” of the county’s fringe benefits program.

“A lack of basic system management has incurred a . . . liability in excess of $265 million” for taxpayers, according to the draft. “It is this lack of control (by the Board of Supervisors) . . . and the perception of having assumed this liability without adequate public exposure that has caused the public uproar and the resulting lawsuits.”

The study’s authors said they could not find evidence that the five supervisors were aware of the $265-million cost of the program or that the board intended to grant such liberal benefits.

“Los Angeles County seems to be providing an unintended level of benefits at a moment in time when our fiscal situation and our budget are in dire straits,” according to the report.

The study also found that while the initial fringe benefits plan was supposed to save the county money, it “appears to have resulted in a significant net annual cost” because of the increased pensions.

The study by W. F. Corroon found that the county’s policy was unusual overall and unique in some aspects when compared to retirement programs in other large counties, cities and corporations.

The commission said the benefits were skewed to help the highest paid county officials, including supervisors and the officials who designed and implemented the program. “There appears to be a benefits bias toward the ‘highly compensated employees,’ ” the report found.

Although the supervisors did not vote on the rule changes and were never informed about the $265-million cost, all the members except Molina have consistently sought to defend the actions of Dixon and County Counsel DeWitt Clinton, who were responsible for implementing the rules.

Dixon said he had not seen the commission’s draft and could not comment. But he defended the pension changes. He said that including fringe benefits in the retirement package brings county employees closer to what their counterparts are earning in the private sector.

County lawyers maintain that the pension benefits, once granted, cannot be taken away from employees. But two taxpayer groups have sued the county to repeal the program.

State Sen. Diane Watson and former Rep. Yvonne Brathwaite Burke, who are running to succeed Hahn in the 2nd District, have said they also want to examine the pension program and scale back benefits.

An aide to Molina called the draft “stinging.” Gerry Hertzberg, her chief legislative deputy, said the report’s findings “confirm what the supervisor has been saying for a long time: The public didn’t know, the supervisors didn’t know, the only people who knew were the bureaucrats who did it.”