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City Council OKs early retirement deal despite opposition

June 26, 2009 |  1:19 pm

The Los Angeles City Council voted this afternoon to move ahead with a plan to give early retirement to 2,400 employees while postponing raises for another 22,000, in hopes of balancing the budget without laying off workers or closing City Hall two days a month.

Meeting behind closed doors, the council unanimously voted to forward the proposal to the Coalition of L.A. City Unions for a ratification vote by its members, two council members said. The deal would then return for a second council vote.

“We can’t afford not to do it,” Councilwoman Janice Hahn said, minutes after the vote.

Still, representatives of one union said his members would probably file a legal challenge to the proposed agreement, a copy of which has not yet been released by city officials.

“The [early retirement plan] that they’re proposing is not legal,” said Bob Aquino, executive director of the Engineers and Architects Assn., which represents roughly 7,800 city workers not included in the negotiations.

Aquino accused the council of excluding some unions from its early retirement talks. And he warned that the council has not been provided with a legally required actuarial study that would spell out the long-term cost of the plan to the city’s pension system, which is projected to consume an increasingly large share of the city budget over the next five years.

Los Angeles Mayor Antonio Villaraigosa plans to have a news conference on the agreement this afternoon.

The proposed labor pact applies to civilian workers, including those who provide such services as trash pickup, park maintenance and library operations. Negotiations are still under way for police officers, firefighters and other unions.

Aquino’s warning echoed comments made two days ago by Gary Toebben, president and chief executive  of the Los Angeles Area Chamber of Commerce. Toebben said he has asked for financial information on the proposal but was told by the mayor’s office and council members that such information was confidential until negotiations were over.

“The public deserves a very thorough briefing when the council gets out of their closed-door session about what impact this will have on the budget over the next five years,” he said today. “Because, ultimately, the taxpayer will end up paying the bill. They’re not in the room. But they’ll end up paying the bill.”

Councilman Richard Alarcon said the plan would be less painful for the public than a furlough plan, which would force workers to take 26 unpaid days off in the coming year.

“We’re doing our best to save city services,” he said.

The chairwoman of the Coalition of L.A. City Unions, whose pact was being reviewed by the council, disagreed with Aquino’s assertions. She said representatives of the Engineers and Architects Assn. were present for the early retirement talks.

Meanwhile, Villaraigosa and Council President Eric Garcetti said this week that they expected that union members remaining with the city would cover the full cost of the early retirement program. Workers hired before 1983 would see their pension contribution hiked to 6% from a range of 2% to 4%, while other city employees would see their contribution to the pension system increase from 6% of their pay to 6.75% in July 2011.

Backers of the plan said the city has already ordered an updated actuarial study, which will not be completed until after today’s meeting.

The proposed agreement with the Coalition of L.A. City Unions is designed to dramatically reduce the possibility of layoffs and avoid furloughs, which would have forced the city to shut some city offices every other Friday.

Under the proposal, the coalition’s 22,000 members would not receive raises for two years. Those workers would then receive six raises between July 2011 and January 2014, along with two cash payouts.

To reduce payroll costs, the city would offer early retirement to workers who are as many as five years away from being eligible for retirement. To entice them to leave, the city would offer some workers cash payouts and, in some cases, credit them with enough years of service to qualify for retirement ahead of schedule.

City officials have been increasingly anxious over the rising costs of retirement benefits for its two pension systems -- one covering public safety workers, the other for civilian employees.

A May report from the city’s top financial advisor warned that the city’s required pension contribution — money that comes out of the same budget used to pay for basic services — could jump from approximately $660 million next year to more than $1.6 billion by the 2013-2014 fiscal year. That increase “far exceeds any projected revenue growth” and is not sustainable, the city's acting administrative officer, Ray Ciranna, wrote.

A favorable vote by the council would immediately send the labor pact to coalition members for ratification.

-- David Zahniser and Maeve Reston at Los Angeles City Hall