San Juan Looks to Reduce Pension Costs

With a new city manager at the helm, San Juan Capistrano will soon return to the bargaining table in an effort to reduce pension costs borne by taxpayers.

Negotiators will aim to shift more of retirement costs to city workers by asking them to pay more into their own retirement plans. Across California and the nation, public pension plans call for contributions from both government employers and their employees, but most government agencies pay all or part of the employee share on top of the employer share, which is the case in San Juan.

Current labor contracts expired June 25, but negotiations for new contracts came to a halt said San Juan's executive services manager, Cathy Salcedo.

Formerly the top administrator in Del Mar, a staff of about 115 in San Juan Capistrano's City Hall, including taking the lead in how much those workers pay into their own retirement savings.

Brust started June 30 that requires her to pay 100 percent of her employee share of retirement costs. (In San Juan, the city manager is not part of either of the two bargaining associations that represent management and classified employees). In hiring Brust, the San Juan Capistrano City Council said it wanted to ask all employees to follow her lead.

So labor contract negotiations will resume in the upcoming couple of months, said Salcedo. 

The City Council will ask the labor groups to change the formula by which the employees' pensions at retirement are calculated.

Currently in San Juan, the formula is 2 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.

If the council is successful, staffers would be looking at a new formula of 2 percent at 57 for new employees. "Under this formula, the employee will be responsible for all of his employee contributions," according to the human resources department.

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.

Currently, all full-time employees become members of the Orange County Retirement System (OCERS). Taxpayers pitch in 3.6 percent of the employee’s share of the retirement contribution for the first two years of employment.

After two years of employment, the city picks up 100 percent of the tab.