Politics

Pension reform: City of Long Beach workers will contribute more

Long Beach Mayor Bob Foster says new union contracts will reduce the city's unfunded pension liability from $1.1 billion to $700 million.
Sharon McNary/KPCC

Sharon McNary | October 23, 2013

The Long Beach City Council voted approval of three union contracts Tuesday night, almost completing a two-year effort to get all city workers to contribute a larger share of retirement funds from their paychecks.

Long Beach officials say theirs is the largest city in the 2.6 million member CalPERS retirement system to achieve full pension reform. The city defines that as getting workers in all nine city unions to put up their full share of retirement contributions.

Many cities in California have promised to pay public employees far more in retirement benefits than can be delivered when the bill comes due. It's called unfunded liability and, in Long Beach, that number had risen to $1.1 billion, said Mayor Bob Foster.

Foster said the newly-approved union contracts and improvement in the city's and CalPERS investments will bring that CalPERS bill down to less than $700 million, which is an amount the city believes it can pay off in about 30 years.

The biggest change is that Long Beach city workers will pay more into their own pension plans. They used to contribute 2 percent of their paychecks and the city paid the balance of the employee's share, totaling 8 percent for rank-and-file workers and 9 percent for public safety employees.

City Councilman Gary DeLong said he does not favor the contracts because they include salary raises of 15 percent for employees in four unions, part of which will cover what workers will pay in increased pension contributions.

The Council held up approving a new union contract for managers for two weeks, demanding to first know when two fire engines and an ambulance would be restored to service.

With the City Council's approval of union contracts representing mostly rank-and-file employees, all city workers will now pay the full share of their retirements. Five other unions representing about 85 percent of the city workforce, including police and firefighters, began paying the higher amounts two years ago.

Additionally, the retirement age has been raised for all employees, and the unions also agreed to create a second tier of lower benefits for new hires.