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Villaraigosa asks council to cut health and pension benefits for new workers

October 27, 2010 |  4:08 pm

As part of a broad pension reform plan, Los Angeles Mayor Antonio Villaraigosa unveiled a proposal Wednesday to cut costs in pensions and retiree healthcare costs for newly hired civilian city workers.

“Our current pension system doesn’t work,” Villaraigosa said at a news conference. “We’ve got to stop the bleeding.”

The mayor said his plan would save the city $255 million for every 1,000 new employees.

If the current system continues, the city estimates that costs for pensions and retiree healthcare could eat up as much as a third of the general fund budget in five years.

The plan comes 10 days after the mayor proposed savings in pensions for new police officers and firefighters. But the plan for uniformed personnel must go before the voters, probably in March, while the civilian pension overhaul needs only City Council approval.

Legal and political restrictions make it difficult to cut benefits for current workers -- about 30,000 civilian employees and 14,000 police and firefighters.

Consequently, the projected savings will largely be in the future for a city that has already shed thousands of employees, cut services and still faces a more than $300-million budget gap next year.

Neither of the proposals applies to employees of the giant Department of Water and Power, which has a separate retirement system.
Among the major changes sought by the mayor for civilian employees are increased retirement age eligibility, from 55 to 62; a reduction in maximum pension benefit from the current level of 100% of salary (after 46.3 years) to a proposed 75% (after 37.5 years); an increase in employee pension contributions from 7% to 9% of salaries; and a new, 2% contribution for retiree healthcare costs (employees currently pay nothing.)

Under the city's current plan, an employee with a $75,000 salary who retires at 55 with 30 years of service would receive a $48,600 pension. Under the mayor’s proposal, a new hire who retires at 55 with 30 years of service would receive $26,100 annually.

The proposal would also eliminate retiree healthcare coverage for a pensioner’s spouse or partner -- one of several proposed cuts that labor leaders are expected to fight.
Victor Gordo, counsel to a coalition of city unions, declined to comment on specifics of the mayor's proposal but said labor was willing to cooperate in maintaining the city’s solvency.
Villaraigosa called the proposals “reasonable and realistic” but said he would listen to alternatives that yielded comparable savings.

The mayor’s plan now goes before the council, where at least one other civilian pension reform proposal is already circulating.

-- Patrick J. McDonnell at Los Angeles City Hall