Supervisors OK Diluted Pension Reform Plan : Government: Gloria Molina is unable to kill a rule giving unusually high retirement benefits to senior officials.

After five hours of sometimes angry debate, the Los Angeles County Board of Supervisors on Tuesday approved a watered-down pension reform plan that allows most senior county officials to continue receiving unusually high retirement benefits.

The vote was a partial but disappointing victory for Supervisor Gloria Molina, who waged a two-year battle to rescind pension rules that boosted the retirement pay of senior county officials by 20% at a cost to taxpayers of more than $400 million.

In the end, the board cast a 3-2 vote to curtail pension benefits for new hires and slow the growth of pension benefits for current employees. Those changes could ultimately save as much as $18 million a year, officials said. But the board refused to approve a key recommendation to freeze or at least reduce the current controversial level of pension benefits, which could have saved an additional $12 million annually.

“Pension spiking didn’t end today,” Molina said after the meeting.

But Supervisor Ed Edelman, who blocked some of Molina’s efforts, said progress was made: “It sets in motion some important steps.”

The current pension rules, adopted in 1991, dramatically increased retirement pay by counting the value of fringe benefits, such as health and life insurance, as compensation for the purposes of calculating retirement pay. Under the pension rules, some senior executives and elected officials can get more in retirement pay than they do on the job. For instance, Public Works chief Tom Tidemanson, who is planning to retire in March, will receive $193,000 in annual pension pay--or about $35,000 more than his current annual salary.

Molina and her ally, Board Chairwoman Yvonne Brathwaite Burke, voted against the proposal on new hires because it did not go far enough. They wanted the benefits for new management employees halted immediately. The motion carried by Edelman, Mike Antonovich and Deane Dana would put off that decision until an agreement is worked out with union workers.

Labor leaders for the most part had endorsed Molina’s proposal and were willing to quickly negotiate a halt to extending the benefits for new hires. But when the package began to unravel under amendments by Edelman and Antonovich, labor officials said all bets were off, and they may refuse to open negotiations.

That would essentially put off any savings from reforms until at least 1995, when contracts come up for renegotiation anyway.

Molina argued--and Gilbert Cedillo, general manager of Service Employees International Union Local 660, agreed--that some of the amendments offered by her colleagues would actually accentuate the pension problem by providing even more generous benefits for the most highly paid managers and elected officials.

For example, she said, Edelman’s plan to freeze the percentage of fringe benefits that an employee can count as part of his compensation, rather than freezing the dollar amount, favors the highest-paid county officials. Fringe benefits for the rank and file are set by dollar amount, while benefits for top management are based on salary and would continue to grow with every pay raise.

But Edelman said that Molina’s recommendation to freeze the dollar amount of fringe benefits counted toward pensions would be illegal. The competing proposals will be debated by the board again next week.

Molina’s proposal was based on the recommendations of the county’s Citizens Economy and Efficiency Commission, which concluded that the current pension rules were overly generous and in need of an overhaul.

Commission Chairman Gunther W. Buerk said that overall he was pleased with the supervisors’ actions but was disappointed that they did not go further and support Molina’s bid to freeze the monetary amount of benefits, which was a key element of the commission’s proposal.

In his opening remarks, Buerk said the pension controversy had been hanging over the county like a “black cloud that will only go away if you take action.” After the meeting, Buerk said, “Well, the black clouds are at least moving.”

Commission member Louise Frankel was more frank in her assessment: “They emasculated it.”

Molina had hoped to build a minimum three-vote majority vote with Burke and Dana, who ran in a hotly contested reelection bid in 1992 saying he was “leading the fight against pension spiking.”

When asked why he did not support Molina on Tuesday, Dana, who was silent through much of the protracted debate, said “I like to have four votes” on important issues such as pensions. But Dana had no apparent problem being part of 3-2 votes that sent some of Molina’s proposals to defeat.

“Dana was not on my side because he’s not running anymore,” Molina said after the marathon debate.

The topic of pensions is complicated enough, but the supervisors’ job of sorting through the issue was complicated by widely divergent figures on the potential savings of the proposed reforms.

The Citizens Economy and Efficiency Commission, which hired the pension consulting firm of W.F. Coroon to crunch its numbers, said the reforms could save $18 million to $30 million annually.

County Chief Administrative Officer Sally Reed calculated the figure at less than $6 million.

Commissioner Frankel told supervisors that the dollar amount was immaterial, that any savings are worth the effort. “Let’s get on with it,” she said.

The county’s decision four years ago to increase pensions of the highest-paid county employees and elected officials has been criticized in a string of investigations, studies and legislation, and by Gov. Pete Wilson and the state’s largest taxpayers organizations. The pension rules, revealed by The Times two years ago, were adopted without a public vote of the supervisors or any study of their financial impact.

The county’s pension decision immediately created a deficit in the employees’ pension fund of about $267 million. That has grown to more than $400 million, after the rules were extended to include rank and file employees on a limited basis. The deficit has to be paid off by the county within 20 years.