Board Acts to Reform Pensions

The Los Angeles County Board of Supervisors on Tuesday took the first step in what is expected to be a long and cumbersome process of scaling back pension benefits that have cost taxpayers $265 million.

The vote, after a blistering report by a citizens panel, was the first acknowledgment by the board that the controversial county pension plan needed reform. The county’s unusual pension rules had earlier been criticized by the grand jury, the state Legislature, Gov. Pete Wilson and taxpayer groups.

Heeding the recommendations of the Citizens’ Economy and Efficiency Commission, the board agreed to seek state legislation to give it the authority to cut back pension benefits for newly hired employees.

In a unanimous vote, the board also approved rules that will require officials to obtain independent financial analyses before adopting changes in retirement benefits.

The board further agreed to freeze some fringe benefits--including the option of taking cash instead of various insurance and vacation benefits--until a comprehensive retirement policy is developed.

Under rules quietly adopted a year ago without a vote of the Board of Supervisors or financial analysis of the impact, the value of fringe benefits such as medical insurance was included in calculations for determining retirement pay. That boosted the retirement pay of senior officials by as much as 19%. Under the rules, some employees will earn more in retirement than they did in salary while working.

The board directed the chief administrative officer to consider postponing a plan that would have granted the expanded pension benefits to thousands of unionized employees.

The CAO also will consider eliminating the option of allowing workers to take cash instead of fringe benefits.

County lawyers and several independent legal experts maintain that pension benefits cannot be taken away from current employees. But under terms of the measure approved Tuesday, the board will consider freezing those benefits at current levels.

Supervisor Deane Dana, who ran for reelection claiming he was “leading the fight against obscene pension spiking,” said he believes the issue “has been put to rest” by Tuesday’s action.

However, Supervisor Gloria Molina, who was author of the motion, said the action represents just the beginning of a complex process.

Joel Fox, president of the Howard Jarvis Taxpayers Assn., said the board’s action “is a step in the right direction” but stops far short of his organization’s demand that the unusual pension rules be rescinded.

The tax group has sued the county seeking to overturn the pension rules, and Fox said the measure approved Tuesday will not deter him from proceeding with the legal action.

Gunther Buerk, chairman of the Economy and Efficiency Commission, said he was satisfied with the board vote, which adopted 16 of 23 recommendations.

Among the options not adopted was a proposal to eliminate a deferred salary program.

The Economy and Efficiency Commission, a panel of 21 people appointed by the Board of Supervisors, found that the board failed to control bureaucrats who spent $265 million on unusually lucrative retirement benefits. The six-month study also concluded that the county was not obligated to provide such generous benefits and added that the program is neither effective nor essential to the retirement plan.

A study by the consulting firm oF. Corroon, conducted for the commission, found that the county’s pension program was generally more liberal than those of other public agencies and private corporations and is especially lucrative for the most highly paid employees--which includes supervisors and the officials who designed and implemented the program.

Despite the board’s action, Chief Administrative Officer Richard B. Dixon defended his decision to adopt the pension rules. “At the time it was the right thing to do,” said Dixon, adding that he still believes the policy is the correct one.