Councilwoman Schipske Seeks Swift Implementation of Just Passed Law Requiring Public Employees To Pay 50% of Pension Costs – Wants To Keep City Council From Spending the Savings With a Voter Approved Charter Change Applying the Funds to the City’s Unfunded Liability –
“That would be real pension reform!”
For immediate release: Contact Councilwoman Gerrie Schipske 562 570-6932
September 16, 2012 --Long Beach, CA – Councilwoman Gerrie Schipske today called upon the Mayor and City Council to act swiftly in implementing the pension reforms now allowed under state law with the passage of AB 340, instead of “saber rattling” about putting a ballot measure to roll back one group of city employee salaries two years from now.
Schipske points out that with the recent passage of AB 340, Long Beach has the power to make substantial changes in the pensions it offers and to increase the amount that the employee must contribute towards pensions. The new law mandates that the City has until 2018 to require all of its public employees to pay 50% of pension costs which could amount to non public safety employees paying 8% of their salary and police and firefighters paying 12% of their salary as contributions to their pensions.
“Instead of wasting taxpayers’ money and time with a ballot measure to roll back some city employees’ salaries, we should be focusing on implementing the full pension cost sharing mandated by AB 340,” says the Fifth District Councilwoman. “Proposals such as ‘rolling back’ some city employee salaries are a band-aid on the gaping wound of unfunded pension liabilities. Implementing full pension cost sharing as soon as possible and applying those savings to our $1.2 billion dollar unfunded liability will go a long way to fixing what ‘ails us’,” emphasizes Schipske.
“The City should not delay implementing this aspect of pension reform. Instead of waiting 6 years and then hitting all employees with this large increase at one time, the City must begin right now on working out a gradual implementation of the employee pension cost sharing requirements with management, public safety and non public safety employee associations,” Schipske explains.
However, Schipske cautions that these employee contributions will produce substantial savings that must not be viewed as another source of revenue for the City Council to spend. Schipske reminds that Long Beach City Councils in the past have spent pension savings instead of putting the money toward reducing the unfunded liability.
“When CALPERS told the City Council it was ‘super funded’ and didn’t need to pay into the pension fund for a period of time, it took the money and spent it instead of applying it toward the unfunded portion of the pension liability.”
AB 340 requires that any savings realized by the State because of the increased state employee contributions will be applied toward the state unfunded liability. “The City of Long Beach must do the same and require that any savings realized by increasing Long Beach public employees’ pension contributions be applied to the City’s unfunded pension liability and not spent by the City Council. If we want real pension reform in Long Beach, we need to take these savings and apply them toward our unfunded pension liability.”
Schipske added that to make certain this Council and future City Council can’t spend the employee contributions, she will propose an amendment to the City Charter that states: “Any savings realized by the City of Long Beach as a result of employee contribution rate increases required by Government Code 20516.5 (AB 340) shall be allocated first to the City’s unfunded liability.”
“I am certain the taxpayers will support this real pension reform because for the first time, we will actually start reducing the City’s long-term liability.”