L.A. may face layoffs if projected pension fund returns are cut
The City Employees’ Retirement System pension board met Tuesday to consider decreasing the assumed annual rate of return for its $11-billion investment portfolio from 8% to 7.75%. The decision was postponed, however, after Villaraigosa and four City Council members sent a last-minute letter warning that such a move could cost the city budget $50 million next year.
“If the [pension] board adopts the proposed … change, the city’s deficit will likely increase to $300 million, necessitating the need for mitigation measures which would almost certainly include employee layoffs,” wrote the city’s Executive Employee Relations Committee, which is made up of Villaraigosa and council members Eric Garcetti, Bernard C. Parks, Jan Perry and Paul Koretz.
The civilian pension board, which has a majority of its members selected by Villaraigosa, will reconsider the proposal in two weeks.
Villaraigosa and the four council members sought the delay. They also asked for the cost of any downgrade in investment projections to be phased in over five years, reducing the effect on next year’s budget.
During Tuesday’s meeting, two pension board members – Elizabeth Greenwood and Ken Spiker – tried without success to kill the plan for downgrading the investment return. That move was rejected on a 5-to-2 vote.
Greenwood represents current employees, while Spiker represents retired employees.
-- David Zahniser at Los Angeles City Hall
Photo: Los Angeles City Hall. Credit: Kevork Djansezian/Getty Images