Amid the worst financial meltdown in a generation, Los Angeles elected officials have cut library hours, scaled back park maintenance and laid off hundreds of employees.
But one sector of the city budget is growing dramatically: retirement benefits for city workers. Those costs, which cover pensions and retiree healthcare, are projected to consume roughly one-third of the budget by 2015.
Charter Amendment G on the March 8 ballot represents the first major effort by Mayor Antonio Villaraigosa and the City Council to rein in those costs. But even some supporters of the proposal, which would affect new hires at the police and fire departments exclusively, say it is too timid a remedy for the city's pension woes.
Under the current system, firefighters and police officers are eligible to receive a yearly pension equal to 90% of their salaries if they have worked 33 or more years. That setup would remain if voters approve Charter Amendment G — a fact that troubles some who have lobbied for more sweeping changes.
"We were pushing for it to be closer to 70%, 75%," said Sam Garrison, vice president of public policy for the Los Angeles Area Chamber of Commerce. "We felt that's a fiscally responsible place to be that's fair to both taxpayers and to the employees."
The chamber endorsed the measure anyway, calling it a "good start." Meanwhile, other backers of the measure contend it contains meaningful reforms, such as requiring newly hired police officers and firefighters to contribute, for the first time, 2% of their salaries toward the healthcare they will receive as retirees.
City Administrative Officer Miguel Santana, the top budget official, said the measure also would pare back pension benefits for many new hires, saving the city $152 million over a decade. That change is more significant to the pension fund, he said, than the relatively small number of retirees who currently receive 90% of their salaries.
Pensions have become a national issue, with governors and legislatures looking for ways to slash payroll costs amid a huge economic downturn. In California, the Little Hoover Commission recently released a report — with dramatic headings such as "Pension Costs Will Crush Government" — recommending a series of retirement rollbacks for public employees.
Retirement planners generally recommend that workers build savings enough to generate 70% to 80% of their working income if they want to retire with the same standard of living. A representative of the Vanguard Group, which manages 401(k) and defined-benefit retirement plans such as those offered by government agencies, goes a step further, recommending 85%, a company spokeswoman said.
Either way, Santana acknowledged that the March 8 pension measure is not a "panacea" for the immediate pension crisis. "This is about getting the city on a strong footing for the future, so we're not in the same situation 20 years from now," he said.
Despite their worries about skyrocketing pension costs, Villaraigosa and the council did not assemble a campaign organization for Charter Amendment G and did not even bother to place an argument in favor of it on the ballot. The Police Protective League, which negotiated with city officials over the terms of the ballot measure, endorsed it but does not plan to promote it.
Meanwhile, two of the seven elected officials who appear in the city's Official Voter Guide as backers of Charter Amendment G currently receive the maximum public safety pension — 90% of their salaries — while receiving a second income as council members. Bernard C. Parks, a former police chief, received his $278,232 yearly pension while earning more than $178,000 as a councilman, according to city records. His colleague Dennis Zine took a $97,920 police pension while earning more than $164,000 last year as a councilman.
The last major change to the city's public safety pensions occurred in 2001, when voters agreed to expand the maximum benefits for police officers and firefighters to 90% of their salaries, from 70%. That measure, which was supposed to help boost recruitment, was backed by then-Mayor Richard Riordan, who has predicted in recent years that pension costs will eventually bankrupt the city.
Of the city's 9,938 retired public safety employees, 8,366 left at age 55 or younger. Charter Amendment G reduces the size of pension benefits for newly hired officers and firefighters who choose to retire earlier.
The measure would allow newly hired sworn employees to receive 40% of their salaries if they retire after 20 years, compared with the 50% available now. Those who work 25 years would get 55% of their salaries, instead of 65%.
When Villaraigosa took office in 2005, public safety pension and retirement healthcare benefits consumed 4.4% of the general fund, which pays for basic services such as police, parks and recreation programs. That figure reached 9% this year and is expected to reach nearly 20% in 2015, budget analysts said.
Much of that growth has been attributed to plummeting investment returns in the city's public safety pension system during the recent recession.