Legislators Aim to Block County Pension Hike : Benefits: Senator says officials ‘stepped over the line’ and offers bill to reverse pay boost. Molina proposal also will be considered.
Legislators on Monday sought to overturn a controversial Los Angeles County pension rule that experts say will cost taxpayers millions of dollars each year while boosting the retirement pay of hundreds of senior officials.
Los Angeles County officials “stepped over the line,†said state Sen. Cecil N. Green, chairman of the Senate Committee on Public Employment and Retirement.
Green introduced the legislation as the Los Angeles County Board of Supervisors prepared to take up a similar proposal by today Supervisor Gloria Molina.
Last year, county officials began adding the value of certain fringe benefits, such as medical insurance allowances, in calculating retirement pay. The Times reported Feb. 23 that the decision was made with little public discussion and no study of the financial impact.
County officials said an obscure state law required them to add such benefits to pension calculations, unless county officials took action to the contrary.
But the co-author of Green’s bill, state Sen. Newton R. Russell (R-Glendale), said, “We did not intend what has happened to take place.â€
Green (D-Norwalk) said his bill would repeal the law that allowed Los Angeles to make the pension changes quietly and without a formal vote of the supervisors.
He said the original 1990 law was “confusing†and subject to abuse but was intended to require county supervisors to vote, one way or another, whether to include certain fringe benefits in pension calculations.
County Chief Administrative Officer Richard Dixon said the original state law clearly empowered the county to adopt the pension changes.
Dixon also said that any effort to rescind the pension benefits for any employees would probably be overturned by the courts.
“The image that the Legislature has is that what we’re talking about is a handful of fat-cat managers benefiting,†Dixon said. “But that’s not the case.
“While the fat-cat managers’ individual benefits are larger, the bulk . . .of the beneficiaries are rank and file.â€
While Green and Russell sought to block the pension changes, other state and local officials criticized Los Angeles bureaucrats for using a loophole in another state law to avoid financial studies and avoid giving public notice of the pension changes.
State law requires public agencies to perform an actuarial study and to provide two weeks’ public notice before pension increases are adopted. But Los Angeles County officials adopted a series of pension system changes over the past three years without either.
Roger Whitby, senior assistant county counsel, said the state code applies to Los Angeles. But he said the recent pension changes fall into a “gray area†outside the control of state law.
Whitby said he considers the new fringe benefits to be changes in “compensation,†but not changes in “retirement plan benefits†covered by the law. “They would have an effect on benefits, but are not a change in benefits,†he said.
Molina, who has asked that the pension changes be rescinded, said the county’s “self-serving†legal opinion “doesn’t make any sense at all.â€
The county is clearly not in compliance with the state law “and that opens the door to rescind the benefits,†she said.
County officials said they do not know how much the pension increase would cost. But experts consulted by The Times said the county could pay up to $50 million a year in increased contributions to the $13-billion pension plan.
The pension increases eventually will affect most of the county’s 85,000 workers. The retirement pay of top officials will increase 19%.
The pensions of supervisors will increase by at least several thousand dollars a year. Supervisor Kenneth Hahn, who is leaving office this year after four decades, will receive a pension of $126,442 a year--more than his current salary of $99,297.
In addition to the annual salary of $99,297, supervisors’ pension benefits will be based on an $8,280-a-year car allowance and a $19,000 annual cash payment they receive to buy health insurance or other benefits. Some supervisors may also make use of a program that allows them to defer up to 10% of their annual compensation each year and then collect it in their final year of employment when it will boost their earnings for pension purposes.
Dixon, a county employee for 33 years, will receive an annual pension of at least $127,236--about a $25,000 increase as a result of the changes that he recommended to the supervisors.
Assemblyman Dave Elder (D-San Pedro) chairman of the Assembly Public Employees Retirement Committee, said the intent of the state rule is clear and that the county should have conducted the necessary studies and given public notice.
“It may be technically legal, but it is not what was intended and it certainly isn’t right,†said Elder, who called the changes in the county’s pension plan “a quantum leap into the public purse.†Elder said he is considering legislation that would clarify the rule.
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