New workers hired by the city of Los Angeles will see reduced pension benefits compared to current employees under a plan approved by the City Council Tuesday.
The council voted 14-0 in favor of a package of retirement-benefit reforms that will affect workers hired after July 1, 2013.
The reforms were fiercely opposed by employee unions, whose members rallied outside City Hall and threatened to sue.
Several council members proclaimed their allegiance to unions but said the changes – which affect civilian workers such as clerks, janitors, sanitation workers and librarians – were necessary to maintain the city's fiscal health.
NewsConference: Lowell Goodman, Service Employees Internt'l Union Local 721
"Do you think I want to do this? No. We have to do this," Council President Herb Wesson said, recalling financial support he received from union members as a young man. "If there was another option, another choice, I would take it."
The plan will need a second vote in 30 days for it to go into effect next year.
The council also approved an amendment directing city official to negotiate with unions during that period to see if a better plan can be drafted in that time.
Villaraigosa Defends Pension Reform Plan
Union members in council chambers booed business representatives who spoke in support of the reforms. In a letter to Mayor Antonio Villaraigosa, lawyers for the Coalition of LA City Unions threatened to sue for breach of contract over the planned reforms.
Dozens of SEIU Local 721 members attended the council meeting, periodically chanting, "We are not Wisconsin.''
Some wore cheese wedges on their heads intended to liken the reforms to efforts by Wisconsin Gov. Scott Walker to strip unions of their collective bargaining rights.
"What this really is about is the deterioration of the relationship between labor and this city. Pure and Simple,'' SEIU Local 721 political director James Johnson told the council.
The changes to the Los Angeles City Employees Retirement System, or LACERS, include:
- Raising the retirement age from 55 to 65
- capping the maximum retirement benefit at 75 percent of final compensation, instead of the 100 percent currently allowed;
- limiting cost-of-living increases to 2 percent;
- increasing employee contributions to benefits;
- eliminating retiree health care benefits for dependents; and
- using a three-year average to calculate benefits to prevent pension "spiking."
City officials said they believed the changes could be made without any negotiation with worker unions because the changes will affect new employees who are not currently union members. But union officials said they had a right to collective bargaining.
The plan is projected to save $4 billion over 30 years, according to Villaraigosa, who defended the plan last week.
The mayor issued a statement on Facebook after the vote Tuesday that praised council members.
"Some will say this plan goes too far, others will say it doesn’t go far enough. But I believe this is the right plan for Los Angeles because it provides retirement stability to our employees who have earned it while allowing the City to continue providing a level of service that Angelenos expect and deserve," Villaraigosa said in the statement.
Workers at the Los Angeles Department of Water and Power and police and fire departments are not affected by the changes.
City News Service contributed to this report.