City is looking to trim benefit for future hires
Andrew Edwards, Staff Writer
Posted: 06/26/2010 10:03:17 PM PDT

SAN BERNARDINO – City Hall’s long-range plan to halt growing deficits includes negotiations aimed at whittling away at the retirement benefits that could be owed to future employees.

City employees’ contracts expire at or before the end of this year, and the city’s weakened financial position could be a premise for difficult bargaining sessions.

City Hall is also asking workers to accept another year of pay concessions in an attempt to solve yet another multi-million dollar deficit.

Rolling back San Bernardino’s pension plans would not do much to pull the city out of its current $24 million deficit, since the adoption of two-tiered retirement plans would not reduce the city’s current pension obligations.

Mayor Pat Morris, however, said a growing deficit creates an imperative to change how San Bernardino spends money. The budget gap is expected to grow to $44.7 million in fiscal 2014-15, absent corrective action.

“We have to reform how we do business and the benefits packages that are available to our employees,” Morris said.

“We’re negotiating a whole host of issues, including the possibility of a two-tiered retirement system,” the mayor added.

Estimates of what fraction of San Bernardino’s deficit results from rising pension costs were not available. City Manager Charles McNeely’s budget message blames much of the deficit on the simultaneous decline of tax revenues and increase of payroll and benefits costs.

The prospect of two-tiered pensions is not good news for city unions. In the words of Tom Ramsey, who represents general employees in the San Bernardino Public Employees Association: “I think you can simply say we don’t like it one bit.”

San Bernardino, like many cities up and down California, negotiated generous retirement packages for its public safety and other employees during the past decade.

The city’s police officers and firefighters have had their retirement plans based on a “3 at 50” package since January 2009. The formula allows retirees to max out their pensions after working for 30 years.

Pensions are set as a percentage of the employees’ highest salary, which is determined by multiplying years of service by a factor of three.

That calculation means that a police officer or firefighter who begins work at age 20 can retire at age 50 and earn an annual pension equal to 90percent of their highest earnings.

San Bernardino’s general employees have a somewhat less generous “2.7 at 55” pension formula that went into effect in January 2008.

The kinds of rollbacks – such as delayed retirement ages – the city is seeking for future hires are subject to negotiations, Morris said.

Elsewhere in California, public employers have pursued and obtained two-tiered systems.

Gov. Arnold Schwarzenegger has reached tentative deals this month with unions representing 23,000 state employees including Highway Patrol officers and Cal Fire firefighters to reduce pension benefits and require future hires to pay more into their retirements.

Republicans representing the Inland Empire in the Legislature have also reported the governor threatened to veto any budget that does not establish two-tiered systems for state employees.

Other municipalities are also trimming pensions. Orange County, for example, negotiated a “3 at 55” formula for its sheriff’s deputies.

San Bernardino County also attempted to convince its sheriff’s deputies to accept a “3 at 55” formula, but deputies rejected a concessions package including that provision earlier this month.

A potential downside to two-tiered retirement plans is the possibility that highly qualified job candidates will avoid cities that adopt them, one union leader said.

“For us to remain competitive, we have to offer competitive benefits,” said Rich Lawhead, president of the San Bernardino Police Officers Union. “If we are to attract quality employees that don’t run the city’s liabilities through the roof because they’re knuckleheads, we have to offer quality benefits.”

Any changes to retirement plans or other contract provisions could happen fairly soon.

Ramsey is negotiating the next contract for mid-management employees, he said.

The firefighters’ contract expires in June. Union President Scott Moss could not be reached for comment for this report.

Police and general employees’ contracts expire at the end of the year.

If unions adamantly refuse to accept two-tiered retirements, the city would be within its rights to declare an impasse and impose them, Morris said.

“That’s not what the city wants to do,” he emphasized.

San Bernardino administrators’ intentions to change retirement deals are not the only potential sources of strife between city employees and their bosses.

San Bernardino personnel – from the city manager on down – are working under agreements to surrender some pay to help City Hall save cash.

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