LongBeachReport.com | LBReport.com | City Att'y, City Prosecutor, City Auditor Employee Groups Agree to City Mgm't/Mayor Sought Pension Cost Reduction Plan, Will Apply Their Salary Increases To Pension Payments

(Sept. 1, 2010) -- LB City Attorney Bob Shannon, City Prosecutor Doug Haubert and City Auditor Laura Doud today announced that their employee groups have agreed to a pension cost reduction plan sought by city management and supported by LB Mayor Bob Foster in which they'll apply their salary increases to their pension costs.

In a release issued this afternoon (Sept. 1), the three citywide elected officials stated that their employees have agreed to apply salary increases to their share of pension costs. In other words, instead of receiving contractual pay raises in cash now, the employees of the three departments will contribute their raises as pension payments to the California Public Employees’ Retirement System (CalPERS);

The three groups also agreed to a retirement formula for new employees that would reduce benefits from 2.5% @ age 55 to 2.0% @ age 60 and calculate benefits on an average of the employee’s highest three years salary instead of the highest one year salary.

The actions are fiscally significant because most of City Hall's $18.5 million deficit [spending exceeding projected revenue] in FY11 stems from increased employee payroll, health care costs, and City payments to CalPERS.

"The nationwide financial crisis has created new challenges for Long Beach," said City Attorney Bob Shannon in the release. "We appreciate and accept the Mayor’s tough but necessary recommendations, and we look forward to working with him and with the City Council in an effort to resolve these challenges, while providing the best services possible for the citizens of Long Beach."

City Auditor Doud said in the release, "We believe that cooperation from the City’s public employee unions is critical to help avoid significant reductions in service and prevent further layoffs. With teamwork, Long Beach will remain on course to not only survive these difficult times over the next few years, but to thrive as a vibrant city well into the future."

City Prosecutor Doug Haubert added, "I am proud of my prosecutors for agreeing to do their part to help balance the City’s budget. They realize the City has to make structural cuts and are agreeing to forgo raises to which they are entitled. This is an important first step toward getting the City’s budget back on track."

As previously reported by LBReport.com, city management has sought modifications/contractual concessions that include pension payment changes from all of LB's city employee bargaining units.

City management has proposed a FY11 budget with across the board ("proportional") spending cuts ("Plan A") if the city employee unions agree to the contractual modifications, but recommends even deeper cuts ("Plan B," with likely service reductions and layoffs) if the unions don't agree to the modifications

As LBReport.com reported earlier today, at the Aug. 31 Budget Oversight Committee meeting, a city management representative indicated that it didn't have finalized agreements with any city employee unions/associations.

Among city employee unions that as yet haven't indicated whether they'll agree to modify their negotiated contracts with City Hall (after modifying them last year at management's request) are the LB Police, Firefighter and Machinist unions (the latter, the city's largest non-public safety employee union unions/association).