City May Rein in Pension Costs

EDITOR'S NOTE: Slight corrections to management pay increases, the current retirement formula (2.7 at 55) and the date by which all employees will be covering their own costs of retirement (July 1, 2013, not Jan. 1, 2013).

City employees would get raises but also start paying their full share of retirement costs under new contracts coming before San Juan Capistrano's City Council on Tuesday.

Overall, the proposed contracts would cost the city $81,005 for the three-year term. But the city expects longer-term savings on retirement costs, according to a staff report. 

City employees in two bargaining units . Negotiations began in November, the staff report says.

Across California and the nation, public pension plans call for contributions from both government employers and employees, but most government agencies pay all or part of the employee share, which has been the case in San Juan.

Now, San Juan wants new employees, retroactively effective to Jan. 1, to pay their own share. Meanwhile, existing employees would start paying half of their portion on July 1. Then, starting July 1, 2013, all employees would pay the full amount of the employee contribution.

“These are pension reform measures that will contain the city’s long-term pension obligations,” the staff report says. “All employees, including San Juan Capistrano Management and Professional Employees Association, Classified Employees Association and executive employees, will soon be paying their full share of retirement costs.”

The staff report estimates the city’s payroll-related costs will be cut by about 5-6 percent. However, as part of the proposed contracts, workers would get raises. Classified employees would get a 3 percent raise effective July 1, and another 3 percent in July 2013; management would get 1 percent effective retroactively to Jan. 1, 3 percent on July 1 and then 3 percent on July 1,  2013; and executive employees would receive 2 percent this July and another 2 percent July 2013.

The proposed contracts feature some other changes, including:

• Benefits – Empoyees won’t get cash back for selecting lower cost medical insurance plans and would be capped out at $5,000 for tuition reimbursements.
• Leaves – Beginning July 1, floating holiday leave would increase from 10 to 20 hours a year and classified employees’ vacation time would max out at 340 hours, up from 300 hours.
• closures – City Hall would close and most employees would have an unpaid leave between Christmas Eve and New Year’s Day; however, employees may use accrued leave to cover them.

Retirement formulas would change. Employees hired after July 1 would work longer to earn their pension.

Currently, the formula is 2.7 percent at age 55, multiplied by the years of service to provide a percentage of final compensation earned at retirement. So workers with 30 years of service credit could be eligible for up to 60 percent of final compensation if retiring at age 55.

Under the new contracts, staffers would be looking at a new formula of 2 percent at age 57 for new employees.

According to the latest data tracked by the state's controller's office, San Juan taxpayers paid as much as $10,076 and as little as $346 per employee for the employees' share of pension contributions in 2009.

In other City Council business, council members are expected to:

• Honor Orange County Sheriff's Deputy Kasey Marshall as deputy of the year
• Discuss options for the now-vacant , now that a
• Extend the grace period for residents to pay their water bills from 10 days to 15 before charging an 8 percent late fee
• Start a process to amend a zoning law so certain retail and food uses could be allowed in business buildings designated as "low-density office" in the . Only one building, the Las Hadas building at Del Obispo Street near Paseo Adelanto, has been labeled low-density office in that area and the owners would like more flexibility in attracting new tenants.