The City Council on Tuesday supported a new, three-year contract for city employees that balances an increase in what they pay for retirement benefits with an increase in their salary.
Under the terms of the new deal, the city will no longer pay the employee share of their retirement contribution to the state’s CalPERS pension system. Instead, the city gives it back to the employees with an increase in their salary over three years to match what they will have to pay into their retirement package.
“At the end of the day, it will basically be a wash,” said City Manager Tom Bakaly. The members of all six city employee bargaining units have ratified the agreement, Bakaly said.
Mayor Jeff Duclos, and Council members Howard Fishman and Peter Tucker supported the new contract. Mayor Pro Tem Kit Bobko and Council member Mike DiVirgilio opposed it.
DiVirgilio called it a “swap in funds that looks good.” He favored a cut in salaries across the board and a reorganization of personnel, including adding some positions. Bobko cited a Los Angeles County Civil Grand Jury report last year that said the city had $14 million in unfunded pension liabilities. The report said Hermosa Beach will face increasing retiree costs that could hurt its ability to provide necessary services if additional changes aren’t enacted.
“We’ve done nothing,” Bobko said.
Fishman said the grand jury report recommended that employees pay their portion of their retirement contribution, which has been accomplished with the new contract. The grand jury report also recommended creating a two-tiered retirement system to reduce city-funded pension benefits for newly hired employees, and the city council did that in April 2011, Fishman said.
“Since we have a three-year contract, we are probably saving close to $200,000 in legal savings not having to bring in attorneys on an annual basis to negotiate,” Fishman said.
Fishman and Bobko also tangled over the drug testing provision of the contract. Bobko wanted random drug testing for the police and fire employees. Fishman said the current policy of testing only under a reasonable suspicion is sufficient.
Tucker said he was glad the months of tough negotiations were over.
“The morale here at city hall hasn’t been great,” Tucker said.
Duclos said city staff has been reduced by 30 percent since 2008 when city employees last enjoyed a raise.
“And they haven’t had a raise now,” Duclos said of the new contract.
Before the vote was taken, Bobko shook his head with his hand over his face while Duclos insisted that the city is already benefiting financially from the two-tier retirement system enacted last year.
Under the terms of the deal, a cost-savings third tier will be added to the city’s retirement system beginning in January. The new contract will be retroactive for six months and remain in effect into 2015, city officials said.
The council also approved a staff report that expands the council’s oversight of the city treasurer and his ability to make investments, including signing off on all brokerage arrangements. The move was supported by City Treasurer David Cohn, who presented the city’s fourth quarter investment report at Tuesday’s meeting.
“I’m thoroughly in favor of what’s in that staff report,” Cohn said. “I’ll say that publicly. I think it’s great, and I think we should continue to go along with it.”
Cohn, who is at the center of dual criminal investigations stemming from a massage he received in his home Nov. 3, has denied wrongdoing and resisted calls to step down. Included among the new oversight measures is the finance director taking over the city treasurer’s duties in the event he could no longer serve.
“I have and will continue to fulfill my obligation to the residents of Hermosa Beach,” Cohn said.
In early 2013, city staff will present to the council a proposed code of ethics for elected officials and city employees.