Hermosa Beach has among the highest CalPERS employer contribution rates of any jurisdiction in Los Angeles County, according to civil grand jury, which recommends reductions.
By Jacqueline Howard | Email the author | July 4, 2011
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Updated (Tuesday 11:32 a.m.): Hermosa Beach City Manager Steve Burrell has issued a statement in response to the grand jury assessment, stressing that the City Council has already adopted pension reforms cited in the report.
"Hermosa Beach's employee pension benefits are comparable to other small cities in the area, with those cities also paying the employees' contribution and providing the same level of benefits," he said.
Burrell added that the City Council has undertaken several initiatives to reduce costs and ensure continued funding for vital services amid declining tax revenues, including the new two-tiered pension system.
"In addition, the city has substantially reduced its costs with early retirements and by eliminating positions, which reduced the staff by 17 positions," Burrell said. "It’s also cut costs by securing grants and donations from local businesses and individuals to pay for some popular community events and important public improvement projects. The city and the council will continue to seek other cost-cutting opportunities.
"As a small community working together, Hermosa Beach has balanced its budget, protected the public’s health and safety and reformed its pension system," he said.
Even though Hermosa Beach is one of the smallest cities in Los Angeles County, it pays the highest employer contribution rate for its police safety retirement plan, according to a public report released by the county civil grand jury (see accompanying report under photo.)
The report, published Thursday, investigated pension plans countywide, among other topics, as part of the 23-member jury's annual assessment of local government operations, which is completed at the end of each jury's term.
Based on this year's report findings, five jurisdictions then were selected for more in-depth review of their retirement programs. Hermosa Beach was one of the five.
The police safety plan is one of three plans the city provides to workers through CalPERS, the California Public Employees' Retirement System.
"In 2009, this plan had the highest contribution rate in the county at approximately 57.9 percent of salaries for the employer and employee share of pension benefit costs for uniformed personnel," according to the report.
The report also found that the city had a negative balance of $13.9 million in unfunded liability—meaning, it's what the city owed the county for the plans at the time they joined in CalPERS funding.
But recent changes have been made. The Hermosa Beach City Council in April approved a two-tiered retirement plan for new public safety workers (including both the police and fire departments) to save the city money.
“In these tough economic times, it is critical that we all pull together and find ways to provide for the ongoing fiscal health of our community,” said City Manager Steve Burrell in a statement after the city and public worker unions agreed on the pension plan.
“By working collaboratively with the city, our public employee groups have helped us craft a pension system that will be sustainable, protect the future benefits of our valued public servants and ensure the city’s ongoing ability to provide police and fire protection and other critical municipal services,” he said.
Even though the city aims to adjust costs with the new two-tiered system, the grand jury argued that's not enough and recommended in its report that Hermosa Beach:
make proposals for reducing or eliminating the employee retirement pickup during contract negotiations with employee bargaining groups (the pickup cost is the retirement contribution share paid by the city);
proceed cautiously with its current initiatives to pay off the negative CalPERS balance.
Under state law, the city is required to submit to the county a written response to both of the recommendations in the report.
http://hermosabeach.patch.com/articles/grand-jury-recommends-city-reduce-pension-costs
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