County Board OKs Freeze of Pension Benefits

In a surprise turnabout, the Los Angeles County Board of Supervisors on Tuesday adopted a reform plan that will freeze controversial pension benefits for more than 84,000 current employees and save taxpayers millions of dollars.

After more than two hours of debate, Supervisor Ed Edelman, who had been blocking the reform plan, suddenly told his colleagues “we need to put this behind us” and agreed to support the changes proposed by Supervisor Gloria Molina.

Once Edelman joined Molina and her ally, Supervisor Yvonne Brathwaite Burke, the victory was assured and the vote was recorded as unanimous.

“It ends the era of pension spiking,” Molina said. “If I could, I’d do a somersault for you. It’s what I’ve been fighting for for two years.”

The vote will freeze the amount of fringe benefits that can be calculated into retirement pay, starting Jan. 1, 1995, but does not alter the county’s unusual method of calculating pension pay.

Under a county plan adopted in 1990, employees’ pensions had been drastically increased by adding the value of fringe benefits to salaries for purposes of computing pension pay. The rules boosted pensions of the most senior employees by up to 19% and made it possible for some employees to earn more in retirement than they did while working.

In adopting the freeze, the board approved a critical element of a comprehensive reform plan prepared by the county’s Economy and Efficiency Commission and promoted by Molina. The citizens group blasted the pension plan as wasteful and self-serving.

The freeze controls the growth of pension costs, but it does nothing to relieve the $400 million in pension liabilities created when the county adopted the new rules. The consensus among legal authorities is that the county may not rescind benefits already granted.

After the vote, commission Chairman Gunther Buerk said that “a black cloud over the county has been lifted.” But he added, “We still think that in 1990 a mistake was made” that has been extremely costly to the county.

Joel Fox, president of the Howard Jarvis Taxpayers Assn., said that after two years of near constant criticism, the supervisors “have realized the importance of this and they did the right thing.”

“They have taken a significant step,” added Rebecca Taylor of the California Taxpayers Assn.

Both taxpayer groups are suing the county to eliminate the pension rules retroactively. Their case is on appeal.

The board on Tuesday also approved a motion by Supervisor Mike Antonovich that would reduce the amount of medical insurance benefits that can be calculated into pension pay.

The two actions could save the county $18 million a year, according to Chief Administrative Officer Sally Reed.

The vote came one week after the board approved some limited reforms. Last Tuesday the board voted 3 to 2 to deny new employees the more generous elements of the pension plan, if it can be negotiated in the collective bargaining process.

Molina and Burke voted against that action because they said it did not go far enough. They argued that the board should immediately eliminate the pension benefits for new management employees. But Edelman, joined by supervisors Antonovich and Deane Dana, advocated a more cautious approach. They also delayed action on Molina’s call for a freeze on benefits for current employees and indicated they would not support it.

On Tuesday, Edelman countered Molina by initially proposing only a partial freeze on benefits for current workers. But after about two hours of debate and additional testimony by legal experts, Edelman threw his support to Molina.

That action completes the package of reforms advocated by the advisory commission.

The county’s decision four years ago to increase pensions, initially for senior county employees and elected officials, has been criticized in a string of investigations, studies, legislation and lawsuits.

The county grand jury called the rules “the height of fiscal irresponsibility” and urged the board to “set an example of responsible government” and rescind them.

The pension rules, revealed by The Times two years ago, were adopted without a public vote of the supervisors or any study of financial impact. The decision immediately created a pension fund deficit of about $267 million. The deficit grew 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 repaid within 20 years.