Even as city worker unions threatened to sue over a Los Angeles pension reform plan for unveiled this week, Mayor Antonio Villaraigosa defended his administration's proposal.
The plan, which would move the retirement age for new workers from 55 to 65 and would reduce the amount of final compensation, would save taxpayers up to $4 billion over 30 years, the mayor said.
The "common-sense plan" is "the next step of putting Los Angeles back toward a more sustainable, long-term fiscal path," Villaraigosa said.
Chief Administrative Officer Miguel Santana had on Tuesday released a report (PDF) outlining the elements of the plan, which the mayor said he expected to be considered by the City Council next Tuesday.
The changes would apply to new employees hired after July 1, 2013. City officials believe the changes can be enacted without negotiating with labor unions.
"These are new workers so they aren't represented by a union," Santana told the Los Angeles Daily News.
The plan includes:
- 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."
Additionally, benefit amounts currently calculated at 2.16 percent of salary times the number of years worked would be reduced to a 2 percent rate.
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Santana predicted a five-year savings of $30 to $70 million, 10-year savings of $169 to $309 million, and savings of $3.9 to $4.3 billion over 30 years.
Villaraigosa was flanked by Council President Herb Wesson and Councilmen Tom LaBonge, Dennis Zine, Joe Buscaino and Mitch Englander at a press conference on the plan Wednesday morning.
"Every dollar that we save on pensions today is a dollar that we can spend on other city services," Englander said.
City unions have been quick opposed to the proposal, with a court fight not out of the question.
"This proposed ordinance is unsound and unlawful," said Service Employees International Union Local 721 President Bob Schoonover. "It's a full embrace of the CAO's vacuous plan to create a second tier in city worker pensions, which is a frontal attack on all city workers, future and present."
Villaraigosa acknowledged that opposition.
"There are going to be a lot of upset people," the mayor said. "We're not here to be popular. We're here to do what's right."
