In an effort to reduce the city's share of the rising cost of retirement for its workers, Los Angeles Mayor Antonio Villaraigosa Thursday called for the city to move swiftly to raise the retirement age and reduce pensions and retirement health care benefits for newly hired employees.
In a letter dated Tuesday, Villaraigosa ordered the city's top budget analyst to expedite a report detailing how the city can enact the changes.
Villaraigosa favors raising the retirement age for new civilian hires from 55 to 67 years old, citing an increasing average life expectancy.
The mayor also wants to reduce the maximum amount of money retired city workers can receive through their pensions. City employees earn a percentage of their salary for each year they work and can earn up to 100 percent of the salaries at retirement.
Villaraigosa proposes that pensions be capped at 75 percent of a worker's salary. The average worker receives a pension worth about 70 percent of their highest salary. Villaraigosa would also reduce employees' pensions by using an average of a worker's five years of highest salary rather than the current 12-month average.
Villaraigosa also wants to halve the maximum amount the city will pay for workers' retirement health care from the current $1,190 per month to $596 and eliminate coverage for spouses or dependents.
Villaraigosa asked City Administrative Officer Miguel Santana to immediately report to the city's Executive Employee Relations Committee, which meets only in closed session to discuss city personnel issues.
The committee, which next meets on Tuesday, is comprised of the mayor, City Council President Herb Wesson, Council President Pro Tem Ed Reyes, Budget Committee Chairman Paul Krekorian and Personnel Committee Chairman Paul Koretz.
Citing an opinion by the City Attorney's Office, Santana said the City Council can approve the pension changes through an ordinance because the employees who would be affected by the changes have not been hired yet and are, therefore, not union members.
"Pensions are one of the fastest growing costs in the city and a real contributor to our structural deficit," Santana said.
An actuarial study of how much the city could save by enacting the changes has not yet been made public, but Santana said the savings would be enough to allow the city to start hiring workers again and guarantee some level of retirement health care benefit for future workers.
The changes proposed by the mayor are likely to face stiff opposition from city employee unions. Lowell Goodman, a spokesman for Service Employees International Union Local 721, said he was unclear on whether the mayor would support enacting the changes without a vote from union members.
"Last year through collective bargaining we negotiated pension reform, and the result of that is that it paid off immediately for the city," Goodman said. "This year, the city's pension costs are down 13 percent, meaning the city spent $63 million less this year than it did last year."
"The mayor is putting the burden of managing the city's finances on the backs of the 99 percent, when we gave him concessions in our last contract," Goodman said. "We essentially handed him a check, and he failed to manage the city's finances."