CITY HALL — Cops and firefighters could be asked increase contributions to their pension accounts by a factor of three in an attempt to rein in escalating costs that are weighing down future budgets, city officials said.
Public safety unions like the Police Officers’ Association and Santa Monica Firefighters International Association of Firefighters Local 1109 currently put in 3 percent of the cost of their pensions, considerably less than any of Santa Monica’s other bargaining groups.
That may have to change if City Hall plans to forestall deficits that could reach $3.9 million by 2015-16 and $9.2 million two years later under the most likely budgetary scenario, said City Manager Rod Gould.
“Starting in July, our police and firefighters will be picking up 3 percent of their salaries,” Gould said. “That needs to rise to about 9 percent.”
Public safety employees will not go back to the bargaining table until next year, and had some idea that management may be asking for new concessions, said Matt Rice, spokesperson for the Police Officers’ Association.
The figure, however, was new.
“It’s not a totally surprising request, but it would all depend on the total package of the contract,” Rice said.
While no one debates the fact that public employee costs are on the rise, each side still has an entire year before going back to the negotiating table, and a lot can happen in a year, Rice said.
They hope for higher revenues that might be able to relieve some of the burden on City Hall’s coffers and, by extension, employees.
Some have pointed to proposed development projects as a way to balance the budget.
Seven hotels are in the planning pipeline right now that could bring in as much as $20 million a year in new taxes if they are all approved by the City Council.
However, they can’t be approved and built quickly enough to make up for what’s coming, and City Hall would be loathe to budget on maybes, Gould said.
“We have to keep budgeting separate from land use decisions,” he said.
The new pressure on public ledgers comes from the outside.
The California Public Employees Retirement System, which manages pensions up to $257.4 billion in assets for governmental entities across the state, announced in April plans to increase employer contributions up to 50 percent over the next five years.
Those changes will hit for the first time in 2015-16, the first year that a five-year forecast shows deficits. It gives City Hall the next two years to figure out how to close the looming gap, and one part of the solution will likely involve going back to employees.
Given that other employees already pay 8.5 percent of their salaries to pension costs, police and fire will have to go first, Gould said.
This would be the second time that City Hall has asked for pension concessions from its public safety personnel.
They first began chipping in for their pensions in the 2011-12 fiscal year after a round of sometimes-acrimonious public discussions.
The contributions started at 1 percent that year and rose by 1 additional percentage point for the following two. The fiscal year that begins on July 1 marks the last increase to 3 percent.
Other employee groups have been kicking in for their pension costs at higher rates since 2007, and were also asked to pay for some of their healthcare in the 2010-11 year.
In 2011-12, they gave up a portion of their workers’ compensation pay, reducing benefits to 100 percent of their salary for the first 30 days and 75 percent for the next, rather than have City Hall pay the full amount for two months.
The story of pension contributions plays out differently across California.
The City Council of Roseville, Calif. approved a new contract in which its police force agreed to pay all of their pension contributions. Others range beyond 10 percent, while a handful remain single digit, said John Lovell, government relations manager of the California Police Chiefs Association.
“It’s just part of the different negotiation processes in each area,” Lovell said. “Part of it is the result of custom and practice and agreements negotiated in the past. It’s a colorful quilt around the state.”
Current quibbling comes over the pensions for current employees, which by law can only be changed through negotiation. Future employees will see considerably thinner pension and benefits packages, in part from local measures like in Santa Monica which established a second tier of benefits for anyone hired after July 1, 2012.
The state also pitched in with the California Public Employees Pension Reform Act of 2013, which increased the retirement age for employees, capped the maximum compensation used to calculate benefits and dictated that employees will always contribute at least half of the cost to fund the benefit.
Those changes apply to anyone hired after Jan. 1, 2013.