(July 10, 2002) -- With virtually no public discussion and scheduled as the last item at a Council meeting that focused mainly on praises for two departing Councilmembers, the City Council voted 9-0 to increase pensions for City Hall non public safety employees. We post a transcript below.
The item was scheduled for the end of the July 9 Council meeting...and no members of the public came to the podium to speak to it. It consumed roughly twenty seconds. Earlier in the meeting, Councilmembers devoted nearly two hours to accolades for departing Councilmembers Ray Grabinski and Jerry Shultz. Both incumbents voted for the pension increase as their final voted action on the City Council.
The Council vote means (pending a second Council vote in a week) that LB taxpayers will begin paying roughly $6.9 million per year starting in October 2004 while receiving money saving agreements with five public employee unions for no pay raise this year and a 3% raise next year.
The management negotiated, Council OK'd arrangement with CA's Public Employee Retirement System (CalPERS, created by state legislators for government employees with benefits more generous than Social Security) means roughly 3,900 city employees can retire with 2.7% of their annual salary at age 55, multiplied by the number of years worked for City Hall. (Previously, the multiplier was 2% age 55 or 2.4% at age 63. The new pension arrangement also lets non public safety employees collect 2% (up from 1.4%) of their salary at age 50.
The "average" non public safety employee pension (average of lowest and highest paid city employees) would be $52,000 (average salary) x 2.7% x 22 years (average length of employment) = $30,888. However, the same formula allows a $100,000 a year City Hall employee who works 30 years to collect an $81,000 annual pension ($100,000 x 2.7% x 30 years).
In November, 2001 the Council voted (6-1, Baker dissenting, Batts absent entire meeting, Grabinski absent on vote, reappearing 60 seconds thereafter) to raise City Manager Taboada's salary (with deferred compensation) to nearly $200,000 a year. Taxpayer advocates warned at the time this would lead to raises for subordinate staff with inevitable pension increases.
The pension chain of events was set in motion in Sacramento, when the CA legislature (Assembly and CA Senate) voted to approve, and the Governor signed, a bill permitting (but not requiring) cities to pay the more generous CalPERS pensions. LB City Hall's contracts with non public safety employees contained "re-open" provisions if the Governor signed such a bill...and the unions moved to do exactly that.
Bill Storey, LB City Hall's Human Resources Director, told LBReport.com that city management moved to negotiate agreements with five non public safety employee unions that will result in LB taxpayers saving money over the next two years because the covered employees agreed to receive no pay raise in the current year and a 3% raise in the next year.
The Council's voted increase for non public safety pensions is in addition to a previously voted Council increase in pensions for public safety employees. Police and firefighters can now collect a pension of 3% of their final salary, times years of employment starting at age 50. The new public safety pensions could prompt police level retirements in the coming months, further depleting LB's thin police level.
The new non public safety pensions may likewise trigger retirements, producing some salary savings (new hires are at lower rates) or elimination of positions (less cost but less available personnel).
The pension item was previously discussed by the Council in executive sessions, closed to the public.
Two related items appeared on the public June 18 Council agenda, but the clerk's minutes do not reflect any substantive Council discussion at that time either. At the June 18 meeting, the Council approved Memoranda of Understanding with the public employee unions and directed posting of a Resolution of Intention to amend the CalPERS pension arrangement, setting the matter for its first reading at the July 9 meeting.
Approval of the amended CalPERS pension arrangement will presumably come up for a second Council reading and vote at the Council's July 16 meeting.