Long Beach Becomes Largest City in CalPERS to Achieve Full Pension Reform

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On Monday the City announced agreements with the last four remaining bargaining units in the City of Long Beach – Engineers, Lifeguards, Confidential, and Management.  With these final agreements, Long Beach has achieved full pension reform, with all City employees paying their full share of pension costs, making Long Beach the largest CalPERS city to achieve this milestone.

“What some believed was not possible has now been accomplished for California’s largest CalPERS city,” said Long Beach Mayor Bob Foster. “Long Beach has achieved full pension reform with lower and more sustainable benefits for new employees and full employee participation for all employees.”

The agreements use the same methodology as the previous agreements with the Police, Fire and International Association of Machinists (IAM) associations to achieve pension reform.  The agreements will result in existing employees paying the full 8% (9% for Safety) of salary towards their pension costs.  Additionally, it will provide the equivalent salary increase of 1.3% per year increase when averaged from FY 09 to FY 15, less than the average 2.1% inflation rate since FY 09.

The City’s Engineering, Lifeguards, Confidential and Management groups have not been awarded any salary increase for five years, a first in the City’s history (with the sole exception of 3% for Confidential in 2009).  During the very difficult years from FY 09 to FY 13, these four groups saved an estimated $6 million in the General Fund and $26 million in all funds by forgoing increases.  The agreements will also help with issues of compression and inequity by replicating the same agreements offered to other employee organizations.

“Long Beach has become a smaller, more nimble organization, reducing management in City Manager Departments by 28 percent and eliminating 786 total positions since 2007,” said Mayor Bob Foster. “But we needed to address an issue of inequality in the City organization and compensate our remaining employees fairly. We ask a tremendous amount of these employees, and will continue to do so as we trust them with the management of the City’s improving finances. Without these agreements, Long Beach may just become a training ground for other cities; a City that cannot attract or retain talent, yet grows talent for other cities. If that happens, this will not be the City we all want it to be.”

Due to Long Beach’s improved financial position and the strengthening economy, the cost of the agreements will be addressed through anticipated stronger than budgeted revenues.  It is expected that the City will maintain the $3.5 million surplus projected in FY 14 with these agreements.  Together with previous pension reform agreed to by these four groups and pension reform achieved with Police, Fire, IAM and other bargaining units, the City expects full pension reform to save a minimum of $250 million All Funds, including over $130 million in the General Fund, from FY 14 to FY 24.

These units represent approximately 800 positions or 14 percent of the City workforce.  The agreements will be brought to the City Council in open session on October 22, 2013 for consideration.

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