City reaches understanding with police employees

New employees in the Laguna Beach Police Department will pay more toward retirement benefits than veteran employees under terms of a memo of understanding approved Tuesday by the City Council.

The directive calls for new hires to contribute the full 9% toward the city’s share of retirement costs, which will pay the employees 3% of their highest salary at age 55 for every year worked.

Current employees were contributing nothing but will begin to pay 2% toward the city’s 9% share starting Jan. 6, 2013.

But they can retire at age 50, instead of 55, as it is for new hires.

“We will save $65,000 in the next fiscal year and $130,000 annually after that,” said City Manager John Pietig.

Government employee benefits have been a hot-button issue since the economy hammered the California Public Employees Retirement System, forcing public agencies to contribute more to cover pension costs.

Laguna’s firefighters negotiated a new contract last year, which increased current employee contributions to 4.5% of the city’s contribution to their retirement fund, but gave no raises. New hires will contribute the full 9%, and the agreement also raises their retirement formula to age 55. That contract is expected to save the city about $400,000 in the coming two years.

The new 30-month agreement with police does not include cost-of-living increases.

“We are not taking this lightly,” said Councilwoman Elizabeth Pearson. “I thank the employees for their cooperation.”

In return for concessions by the police employees, the city will absorb the increase in medical premiums, up to 8.6% in 2012 and up to 10% in 2013, Pietig said.

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Modification Timeline

Feb. 7: Council adoption of the Resolution of Intention to approve an amendment to the contract between the city and CalPERS.

First reading of the ordinance authorizing the amendment to add a second-tier retirement formula for police safety employees.

Council adoption of a resolution establishing the 9% employee contribution for new police safety employees and the 2% contribution by current sworn and non-sworn members of the employee association.

March 6: Second reading of the ordinance after required 20-day waiting period.

April 16: Expected date the ordinance and the second tier 3% at 55 retirement formula will take effect.