06:25 AM PDT on Tuesday, April 5, 2011

The Press-Enterprise

Riverside County supervisors voted Monday to move ahead with a plan to provide lower retirement benefits for newly hired employees.

The plan, approved in concept, could save the county more than $200 million over the next 10 years. It still must come back before supervisors for final approval.

“We must go to a second tier for new employees,” Supervisor John Tavaglione said.

“The current system we have is just unsustainable.”

Members of the county’s largest employee unions opposed the move.

Dozens of employees held signs criticizing the plan, and many stood together on the steps of the County Administrative Center in downtown Riverside dressed in matching orange union T-shirts.

Officials with the Service Employees International Union Local 721 and the Laborers’ International Union of North America Local 777 said the county cannot impose a second tier of benefits outside the bargaining table. The unions all but threatened litigation.

“Any unilateral action is not an option available to you under the law,” said Victor Gordo, a lawyer for the laborers’ local. “This seeming distinction between new and existing employees is simply a legal fiction.”

Supervisors voted to negotiate with employee groups, although the county might be able to adopt the lower benefits for new workers without the unions’ consent.

“We have gotten differences of opinion from our counsel in terms of whether even the second tier should be done through meet and confer,” Tavaglione said.

Bob Blum, an attorney hired by the county to help put together the pension proposals, said employees the county has not yet hired have no vested rights in retirement benefits.

That means the county can provide them a lower benefit than existing employees. But Blum said bargaining may still be needed.

The county cannot legally reduce benefits for existing employees but is asking for current workers to contribute more toward their retirement, which would provide an estimated $20 million to $30 million in immediate savings.

New Proposal

Under the framework supervisors approved Monday, newly hired workers would receive a lower retirement benefit and contribute more toward their own pensions. The retirement age for public safety personnel would increase under the plan.

The proposal would provide a benefit of 2 percent of salary for each year of service at age 60 for general workers and 2 percent at age 55 for sheriff’s deputies and other public safety employees.

Currently, general employees receive 3 percent at 60, and public safety personnel receive 3 percent at age 50.

In addition, the proposal would calculate an employee’s retirement based on the average of his or her final three years with the county, a move that helps prevent so-called pension spiking. Currently, the pension is based on the final year’s earnings.

Finally, the county would no longer pay for an employee’s share of pension contributions.

Under the county’s existing pension plans, general employees pay 8 percent of their salary toward retirement for the first five years of employment.

After that, the county picks up that cost. Similarly, public safety employees pay 9 percent toward their retirement for the first three years of employment.

County officials said rising pension costs are cutting into basic public services. Without changes, the county’s annual pension costs could top $300 million by 2020.

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