El Segundo police agree to “two-tier” pension reform

In recent years, proposed “two tier” public retirement systems frequently created discord between cities attempting to cut employee benefits costs and public safety employee groups intent on holding on to their existing benefit packages.

Things have changed.

With little fanfare, the El Segundo Police Officers Association this month entered into an agreement with city management in which new hires will need to work until the age of 55 before being eligible to retire at 3 percent of their salary for each year served, the so-called “3 percent at 55” system replacing the previous “3 percent at 50” that was once common among all public safety employees in California.

“It has become the new normal,” said ESPD Sgt. Mike Gill, president of the police association. “It’s actually not a tough pill to swallow. Everybody is accepting of it.”

Gill said that the new retirement formula doesn’t effectively change much, since it’s become less common for new officers to be hired at the age of 21 and more common for new officers to be in their late 20s or early 30s. He noted that the POA actually initiated the “two tier” proposal in 2010 and formally agreed to the new system last year. The city has spent nearly a year working out the details with the California Public Employee Retirement System (CalPERS) and the City Council on Aug. 7 unanimously approved the new agreement.

Cities required contributions to CalPERS have drastically increased as the retirement system’s market investments drastically lost value – and returns – during the down economy.

“Ongoing retirement costs are a substantial part of our budget, and the move to a second tier system for most cities is a way to address future years, getting those costs more under control,” said City Manager Greg Carpenter.

ESPD has been particularly hard hit by the belt-tightening necessitated by the prolonged national and regional economic downturn. ESPD personnel took a 5 percent wage cut in 2010, and the number of sworn officers has decreased from a pre-recession peak of 74 to a little less than 60.

In the new agreement, the POA also agreed to contribute three percent of salary towards retirement costs.

Gill said that after some difficult labor negotiations in 2010, relations between the city and the POA have grown increasingly collaborative. In the new agreement, the city agreed to allow officers to apply hours spent in court to taking time off at a later point – a win-win for both the city and the POA, as the city no longer pays wages for court time.

“All in all, at the end of the day, the city was accommodating with our needs, and we were to theirs,” Gill said. “We try to do what is best for the city, as well as try to protect our members. But we know it’s a two way street, and we try not to have a stand-off.”

 

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