On Wednesday, Sept. 1 the Seal Beach Police Officers Association and the Police Management Association signed their respective three-year collective bargaining agreements, for the next three fiscal years beginning with 2011, according to a press release issued by the city of Seal Beach over the Labor Day weekend.
Staff will recommend that the City Council approve the agreements at the Monday, Sept. 13 council meeting.
The agreements provide that future hires in the Seal Beach Police Department will receive a reduced formula for pension, “2 percent at age 50,” instead of “3 percent at age 50.”
Seal Beach officers have been working without a contract since July 1.
According to the city’s press release, the police union and the Police Management Association have been negotiating since February.
Also part of the agreement, retiree compensation will be based on the three highest years of salary rather than a single highest year.
This will provide for continuity and to reduce costs, according to the press release.
Statewide changes, whether enacted legislatively, through the initiative process, or by agency rule-making, in the areas of retirement age, early retirement, Employer Paid Member Contribution, Social Security integration, membership of the CalPERS Board of Directors, and definition of retirement-eligible income for calculation purposes is required to further sustain the overall fiscal health of the city’s retirement system, according to the Seal Beach press release.
“We bargained for the 2 percent at 50 formula for future hires because we trust our City Manager David Carmany and we think it’s to the betterment of the municipal organization long term,” said Seal Beach Police Sergeant Joe Miller, speaking for the Police Officer Association.
Seal Beach activist Robert Goldberg, who makes a point of watching the city budget, was pleased when he heard about the proposed memorandum of understanding between Seal Beach and the Police Officers Association. “This is very positive,” he said. “It’s a step in the right direction.
Carmany told the Sun that the city will pay for adjustments to health care costs for Seal Beach officers.
According to the MOU that the City Council will look at next week, the city will contribute an equal amount toward the cost of health care for sworn officers, non-sworn employees and retirees. Carmany told the Sun that the agreement is “a long-term saving to the city’s finances.”
The city manager pointed out that seven or eight Seal Beach officers will retire in a year or two. The new pension agreement would apply to officers hired to replace those individuals when they retire.
According to the city’s press release, the pension plan will contemplate individuals’ use of personal income and post-retirement needs into the benefit formula to enable a full-career public employee to substantially maintain his or her lifestyle.
“I was concerned that the higher pension formula multipliers that were authorized by state legislation in 1999 (SB 400) and thereafter (3 percent at age 50, 2.7 percent at age 55, etc.) could exceed the level of replacement income recommended by financial planners (75 to 85 percent replacement income) for a full-career public employee and, long-term, were financially unsustainable for the city of Seal Beach,” said City Manager David Carmany.
The “3 percent at age 50” formula multiplier was reviewed and adjusted to ensure long-term fiscal sustainability for the city of Seal Beach.
“This is a solution that works for the city of Seal Beach and its employees; long-term, the city will save money,” said City Manager Carmany. The present CalPERS defined benefit pension system has a long history of successfully serving the interest of employees and serving the needs of most public employers, and participation in this different CalPERS retirement formula clearly is a matter of local control and decision. The revised public pension system will apply to new hires as current employees have contractually protected rights.
By implementing the new formula (2 percent at age 50), the CalPERS employer rate will be approximately 13.346 percent of gross pay vs. the current employer rate of 20.66 percent (excluding 9 percent employee portion paid by the city). That represents a cost savings to the city of almost $5,100 per employee upon commencement of employment with the city.