California cities contemplate new pension tiers (excerpts)
North County Times — June 15, 2009
SAN DIEGO COUNTY — City officials and union leaders from around the region have said little in recent days about what seems destined to become a contentious policy issue — cutting pension costs by establishing a second "tier" for newly hired government workers.
A committee within the San Diego City/County Managers Association has been looking into pension reform for several months. A formal report could come as early as this month.
Gould's committee held a closed-door meeting with labor leaders Thursday to solicit feedback on a draft version of the plan that suggested cutting pension benefits for new hires.
Union representatives haven't said much publicly about the idea.
Public agencies have become increasingly concerned about pension costs, especially in light of the economic recession. A decreased benefit for new employees could save cities millions of dollars in the long term, but it would represent a setback for new employees.
In California, most public safety workers can retire at 50 with 3 percent of salary for every year of service. Pensions for nonsafety employees vary.
Gould's committee circulated a draft proposal in May that suggested cutting benefits for new hires to 2 percent of salary for every year worked, with public safety workers eligible to retire at 50 and nonsafety employees at 60. And all employees, the committee said, should share the cost of the pension program (in some cities, this already happens).
Lani Lutar, president of the San Diego County Taxpayers Association, lauded the committee's efforts. "To try and address this as an entire region makes a lot more sense," she said Friday. Most cities in San Diego County use the California Public Employees Retirement System, the nation's biggest government pension fund. Since the system is funded partly by investment earnings, changes in the stock market affect what members need to contribute.
Lutar said the current pension levels are unsustainable.
