LA Slapped With Additional Retiree Pension Payments
The ruling was handed down on July 11, turning to a 1997 California Supreme Court decision to arrive at its decision. In that case, the Supreme Court required that extra pay should be added to public employees regular salaries in determining their pensions and that they are entitled to the added value to their pensions back to 1995, according to a Los Angeles Daily News report.
The state high court said extra pay includes bonuses and any vacation or sick leave the employee takes out in cash for any one year. The forms of compensation also include:
- bilingual bonuses
- shooting bonuses
- hazardous pay
- pay for custodians acting as watchmen
- registered nurses working weekends
- swing shift bonuses
However, the appeals court deviated from the earlier ruling that originally determined counties do not have to use employee benefits in calculating pensions, including accrued vacation time, termination pay, insurance-related payments paid by counties into benefit plans and employer pickups, which are payments counties make into the retirement system on the employees’ behalf. Instead the appeals court found county pension payments should also use these benefit accrual amounts.
Shortchanged
Los Angeles County Assistant Chief Administrative Officer Sharon Harper said the ruling will create a $190-million unfunded liability, with the county eyeing a combination of Los Angeles County Employees Retirement Association (LACERA) and county funds to cover the liability.
LACERA Chief Counsel David Muir said the LACERA Board of Retirement could decide to ask retirees who received the additional compensation to make contributions on that compensation to pay a portion of the $190 million price tag, or the expense could be amortized over 30 years, and taxpayers could pay it off like a home loan.
County officials said they have not decided whether to appeal the decision to the state Supreme Court.
The latest judicial ruling comes after the county pension fund lost $5.1 billion of value in the last three years. As a result of that loss, taxpayers will have to kick in an extra $300 million into the retirement system in the next few years to pay the pensions of more than 46,000 retired county employees.
“It’s my belief that in the next 10 years, the pension crisis will make the electricity crisis of a few years ago look like nothing,” said Jon Coupal, president of the Howard Jarvis Taxpayers Association. “The pension crisis is a result of benefits going way up during good economic times with rapidly escalating high- tech stocks.”