Neighborhood Council leaders will hold a press conference at 5:30 p.m. Monday outside the Braude Center at Van Nuys City Hall to offer solutions to LA’s budget crisis and call for full community involvement. At 6 p.m., the City Council Budget Committee chaired by Bernard Parks will hold its first in a series of public hearings on the crisis.
Here are proposals that NC Budget Representatives drafted Saturday at the conclusion of a series of meetings of the BudgetLA Committee and the Saving LA Project. Many of them are in line with the proposals jointly put forth by the business community.
1) Pension Reform:Increase employees contributions to reflect market
2) Raise eligible retirement age to social security age
3) Re-evaluate post-retirement health care benefits
4) Service credit purchase based on actuarial value
5) Add a neighborhood council member to all of the pension boards for
transparency and oversight
6) Consolidate the 3 agencies administering LA pension funds
7) Consider additional forms of pension reform including but not limited
a) Defined contribution plans
b) Annuity based plans
Hire an independent legal council proficient in Chapter 9 filings to
explore and advise on the contractual, fiscal, and short/long term
effects of such a filing, and share that information with the
neighborhood council system in a timely manner
9) Review and analyze the amount of payroll reduction vs layoffs to
preserve essential services, not lower employee moral, and avoid
unnecessary layoffs in these troubling economic times.
10) Do a full department by department review and consolidate where
duplicate services exist.
11) Instruct the CAO to do a 5 year balanced budget plan in order to stop
the constant reactionary governing that currently exists. This too will
allow for a streamlining of departments and personnel needs.
12) Do a complete cost benefit analysis of E-RIP.
13) Lower the annual service credit for each year worked and cap total
employees of the city accrue benefits at 2.5%a year for public safety
employees, 2.19% a year for general city employees, and 2.1% a year for
DWP employees. Employees can retire at 90%to 100% of their final salary
as a pension benefit, depending on which plan they are in. We believe the
benefits should be capped at 65-75% of the total salary for all city
employees, not including overtime, unused
vacation and sick days, bonuses, or all other forms of
contribution-The Mayor’s Budget Committee reviewed the pension reform
measures recommended by the Los Angeles County Business Federation.
In general, we support most of the recommendations. There needs to be
some clarification and possibly some modification of the points raised by
the group (please see the attachment).
In conjunction with the Federation’s proposal, there is another
consideration that must be on the table when renegotiating labor
contracts with the City’s unions.
We believe it is time for the City to transition employees from the
current defined benefit program to a defined contribution plan. We
recognize that the feasibility of such a transition would need to be
analyzed by experts independent of the various boards administering the
civilian and sworn plans.
There would be up front costs, but there
could be potentially significant long-term cost savings to the city and
added flexibility to plan participants. Up front costs could be
The transition need not be for all employees, for example, participants
nearing retirement or with considerable service should or would be
excluded. However, other segments should be given a choice; more
recent hires along with all new hires should fall under a defined
The reason for this recommendation is based on the unpredictable costs to
the city associated with funding defined benefit plans. The funding
requirements of these plans are subject to market swings, plan
administrator competence, very subjective assumptions and politics.
Defined benefit plan participants, although they may assume they are
shielded from risk, are not completely- a recent Federal Court decision
involving one of San Diego’s plans defined the City’s subsidy of
pension and other benefit plans as a component of compensation – not a
constitutionally protected vested benefit. In addition, municipal
bankruptcy can require new labor contracts with higher employee
contributions (not to mention lower wages).
Defined contribution plans entail assumption of risk by employees, but
the risks can be minimized by periodic, scheduled re-mixing of
investments, a service offered by managers of almost all such plans. More
importantly, the cost for the City will be predictable and
controllable. Administration of these plans can be outsourced more
easily, thereby eliminating most in-house costs and achieving greater
In summary, the objective of the City must be to strike a balance between
the risks shared by employees and taxpayers with respect to all
retirement and health benefit programs. This is essential to the
long-term financial health of the City and the avoidance of
Time is of the essence. The longer we delay pension and benefit
reform, the greater the odds for bankruptcy. The tipping point may
be closer than we think.
15) The committee urges the city council, the Mayor, The CAO, and
the controller not to employ gimmicks, no half way measures, no stop gap
measures and no deferring to the future unless all avenues of the fix
have been explored, analyzed and implemented.