July 6, 2011

City Council Votes to Contribute to Their Own Pensions

On July 5, 2011, the San Leandro City Council voted 5 to 2 for members of the City Council to pay the employee contribution portion of their pension contribution. Councilmembers Joyce Starosciak and Diana Souza voted against the change, arguing that a salary reduction would be more equitable. This means that Councilmembers Starosciak, Souza, Pauline Cutter and Michael Gregory will be receive an estimated $1,306 less each year and Mayor Stephen Cassidy will receive an estimated $2,600 less each year.

Previously, the City of San Leandro paid this for Councilmembers and all employees. For non-public safety employees, that is 8% of their salary and for police, it is 9%.

In 2010, the City of San Leandro paid $2,613 for former Mayor Tony Santos' employee CalPERS contribution, in addition to the employer portion of $4,363. That was the most for any elected official in the Bay Area, For three of the City Councilmembers (Souza, Starosciak, and Gregory) the City of San Leandro paid $1,306 each for the employee CalPERS contribution ($1,210 in 2011) and $2,181 each for the employer CalPERS contribution. The City of San Leandro did not pay any CalPERS contribution for Councilmember Ursula Reed and former Councilmember Bill Stephens because they were covered by their full-time jobs working for school districts. Although Councilmember Jim Prola is eligible to receive the pension benefit, he has voluntarily declined it since taking office.

If the Council decides to pay for their portion of the CalPERS contribution, the City will save $7,120 with the current City Council and up to $10,500 under future City Councils.

While the amount of money is small compared to an annual general fund budget of $71.76 million, the change sets the stage for contract negotiations in 2012.

Alameda_County_PERS_Rate_Comparison_2010-2011.jpg

San Leandro is one of just three cities in Alameda County that pays the entire portion of non-public safety employees' pension contribution. The other cities are Berkeley and Pleasanton, but Pleasanton excludes management employees.

Similarly, San Leandro pays the entire portion of public safety employees' pension contribution, along with the cities of Livermore and Oakland. Pleasanton pays the full employee contribution for police, but not fire. However, it appears that things will soon change in Oakland, where a draft of the new police contract contains a provision for Oakland Police to pay the full 9% employee portion of their pension contribution.

In 2011-2012, the average San Leandro police pension payment is 42.6 cents for every dollar of salary. That is more than any other city in Alameda County and it is projected to rise to 46.7 cents next year. Berkeley is the next highest, with 36 cents this year and 40 cents next year.

By contrast, the average pension payment for San Leandro's non-police employees is 13.2 cents for every dollar of salary this year, rising to 17.5 cents next year. Oakland, Hayward, Pleasanton, Livermore, Fremont, and Berkeley are projected to pay more than that next year.

If the City of San Leandro employee unions agree to a similar change in their contracts, the City of San Leandro would save an estimated $3 million per year. Changes made to the non-public safety employees contract in 2010 modified the amount new employees would receive at retirement (from 2.5% at 55 years old to 2.0%), but savings from that provision won't be realized until new employees are hired.

Posted by Mike Katz-Lacabe at July 6, 2011 8:24 AM | TrackBack
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