Rialto scrambles to fund new pension costs
Josh Dulaney, Staff Writer
Posted: 01/23/2010 07:05:05 PM PST

RIALTO - At a time when local governments are looking to cut spending every way they can, this city is preparing to spend up to $5 million a year on upgraded pension packages for police, firefighters and other employees.

Budget plans for the 2010-11 fiscal year will have to account for the new "3 at 50" pension plan, which allows firefighters and police officers with 30 years of service to retire as early as age 50 and collect up to 90 percent of their highest annual salaries for the rest of their lives.

A slightly less generous improvement is also kicking in for the city's 400 general employees.

The combined pensions will account for roughly 10 percent of Rialto's $52 million annual budget, when they take effect next year.

City Administrator Henry Garcia had no luck in recent weeks trying to convince the workers' unions to delay implementation of the new plan because of the tough economy. The unions already gave up about $4 million in concessions to close last year's budget gap.

It'll be up to the City Council to decide where the money comes from.

"We're going to use reserves and look for funding sources that can fund it," said Councilman Ed Scott, who was among a 3-2 council majority that voted to approve the pension two years ago.

He added: "I have some faith and belief that the economy is going to turn around and we're going to find some revenue sources to deal with it."

Officials with the union representing Rialto police officers said their members have already given up plenty to help the city cope with the recession.

"We have given up pay increases, holiday hours. . .We'd given up a lot in advance so it's not a hardship on the city," said Richard Royce, president of the Rialto Police Benefit Association.

Representatives of the fire and general employees' unions could not be reached Friday or Saturday.

In the short term, the city will rely on its $31 million in economic reserves, a pot set aside for a rainy day.

Rialto isn't alone. The 3 at 50 pensions for public safety employees are as common in San Bernardino County as the government officials who worry the pricey benefit is unsustainable.

"I think in general there's concern about the retirement system across the state, the retirement system that serves government as a whole," Fontana City Manager Ken Hunt said. "Fontana is a very good system and it's very expensive. The question becomes, can it be maintained."

Last week, Orange County culminated years of negotiations about 3 at 50 when sheriff's deputies agreed to reduce the pensions for new hires. The move helps the county, but doesn't solve the long-term pension funding problem.

The thought of more local governments adopting new 3 at 50 plans in the current economy should be of huge concern to taxpayers, said Orange County Supervisor John Moorlach, who has long fought to roll back that county's 3 at 50 pensions.

"The pension contribution will be an ulcer in the budget because it will always grow and then you will have to bump other things out," he said.

A divided council

The 2008 effort to approve Rialto's new pensions was not unlike the debate that follows 3 at 50 proposals everywhere.

Supporters argue that police officers and firefighters put their lives on the line for the residents they serve, often shortening their own lives through wear, tear and exposure to a wide range of hazards.

As a result, they deserve earlier retirements and financial security.

"We're getting guys at 25, 26, 27 and they don't last much past 50," said Royce, the police union president. "This is a very hard career."

Some police and fire departments also worry about losing good employees if they can't match the pensions being offered elsewhere.

"I supported it because it's a tool the police chief needs to recruit some talent into the city," Scott said. "We had a history of not good recruitment, and when you're surrounded by municipalities that have (it), it's hard to match that."

Mayor Grace Vargas and Councilman Joe Baca Jr., joined Scott to approve Rialto's 3 at 50 pensions by one vote.

Vargas did not return a message seeking comment but Baca said the city owes it to the workers.

"We need to take care of our employees," he said. "They do a good job in the city and they should be awarded with a good retirement."

But critics argue the plans are far too generous, given the much more modest pensions typically found in the private sector. Another criticism is that, rather than spending their 50s playing golf, many maxed-out "retirees" take new jobs at other departments, collecting consulting fees or full salaries in addition to their 90 percent pensions.

"In economic terms, these people are millionaires and that's paid for by the taxpayers," said Steven Frates, senior fellow at the Rose Institute of State and Local Government at Claremont McKenna College.

Councilwoman Deborah Robertson and former Councilwoman Winnie Hanson voted against Rialto's 3 at 50 plans.

"It was just a very expensive thing and I felt the city could not afford it and I think I was right," Hanson said last week.

But voting against the interests of the police and fire unions might have carried a political price. Hanson suspects the vote might have cost her a 2008 re-election bid against Ed Palmer months later.

Robertson did not return messages seeking her reasons for opposing the pensions.

It's the type of issue that can make city leaders feel as if they're in a no-win situation.

"Somewhere, the line between public safety, public good and public costs needs to be debated," said Garcia, the Rialto city administrator. "People want public safety. Here's the cost, you pay for it and that's the way it is."

Some seek to roll back pensions

In Montclair, city officials have trimmed services, frozen job vacancies, reduced overtime and benefits, and borrowed $2.5 million in General Fund money to ensure the retirement program is funded.

And even before the current recession, they sought concessions from the unions on 3 at 50.

"Every agency is struggling right now and we all do it in different ways," said Edward Starr, deputy city manager in Montclair. "You don't want to do it on the back of the employees, but you also don't want to do it on the back of the community."

Montclair went to a two-tier system in 2005. Safety personnel hired after June 29 of that year would have a "3 at 55" benefit, while those hired before then kept 3 at 50.

Montclair's experience also illustrates how pension costs can change dramatically with modest changes in the retirement age.

Starr said if all cops in Montclair were on 3 at 50, it would cost the city roughly $1.6 million a year. If all were at 3 at 55, the cost would be about $560,000 a year.

Rialto officials hope to follow suit.

"We're looking at that," said Scott. "When we go to negotiations, we would ask the labor unions to consider a two-tiered system."

Others want to take the discretion away from local governments.

A group called California Foundation for Fiscal Responsibility has crafted an initiative for the November ballot that would drastically reduce pension benefits for future public employees.

According to the non-partisan Legislative Analyst's Office, the group's initiative would amend the state Constitution to limit defined-benefit pensions and retiree health benefits for state and local government employees hired on or after July 1, 2011.

The measure establishes minimum retirement ages, such as 58 for new cops and firefighters, and 60 for other public safety employees. All other new employees would submit to the full retirement age as defined by Congress, which is 67 for persons born in 1960 or after.

"It's sucking money out of our economy," said Marcia Fritz, who helped craft the initiative. "It's our money and then people start drawing on these investments and then they (retire out of state)."

Fritz estimates the measure would reduce costs statewide by $14 billion over the first six years and $533 billion over 33 years.

In the meantime, Rialto officials realize they need to increase revenue. There are high hopes for a San Bernardino County expansion of the landfill here. Also on the table is a plan to lease out the city's water department and save maintenance costs. Consolidations of city departments are also being considered.

"Right now we're going to have to make some tough decisions," Baca said.

Some officials worry it might already be too late for some cities.

Moorlach, the Orange County supervisor, pointed to the Northern California city of Vallejo, which filed for bankruptcy in 2008, in part, because of expensive retirement packages.

"We're all trying to figure out who files for Chapter 9 bankruptcy first," he said, "whether it's in Orange County or San Bernardino County."

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BS Ranch Perspective:

I know this reference the retirement system that the city is claiming problems paying for, and that is that the RPBA took a 10% reduction in their pay, they have lost seven days of Holiday Time for the year, also they cannot build up more then Two Weeks of Comp. Time. They also are working on a very strict Schedule that doesn't allow Overtime Pay, they are asked to take Compensation time off, a thing that has been capped, to the point that it is only approx 80 hours cap, so if they work overtime and put in the compensation time as requested by the Management, & they start to exceed the cap, they are then asking for more trouble at work!

I know that this sounds weird since they are not paying now, they are paying the Officer with Time off, but if they don't have the manpower on the schedule they cannot allow anyone time off, that is where the Comp. Time reaches the cap fast and cannot be reduced as there is not enough Officers to make up a safe shift.

The pay cut, Holiday Time cap Reduction and Holiday Time reduction was done so that in the 1.5 years in the future they might be able to keep the Retirement Package, Rialto after all was working without this retirement package for three years before it was to come into existence.

Now that the time is Nearing, and they have asked the Police Department to take a Cut in Pay, and they agreed and complied, it has been really hard for a great deal of Officers to work through this cut in pay. I see it first hand Knowing Many of the Officers and their Families, the struggle has been difficult.

The City of Rialto has paid for the retirement Plan on the books for more then Thirty years, Paying the 9% of pay for the Current Retirement System, and now that they have agreed to new plan, a Plan that over 90% of all law enforcement currently have with the exception of the new hires for Orange County Sheriffs Department. Even the lower priced Departments have it, Departments such as San Bernardino Sheriff's Department, The Sheriff's department for the most part has a lower budget for their Deputies, and this you would think would make it harder for the SBSD to afford such a Retirement Plan, but they have had this said plan for close to Ten Years now.

Surly the Rialto Police Department can pay for this plan, by doing one simple thing, and this simple thing was forced upon the Police Department already and that is to tighten their belts. The Police Department Employee's have done this and they have not lost any of the officers to bankruptcy etc etc...

I am sure that the City of Rialto will be Okay, they have been Okay in the past and this is not anything to worry about, Unless the City Council Members make it hard for the Police Department. a thing that seems to be Par for the Course, since they made it such a big Headline and are attempting to make their own Employee's the bad guys like they did back in 2003 with the Contract Battle to close the Police Department and offered the job to the Sheriff of San Bernardino County!

That ended in a very embarrassing Loss to the City Council, Look at those council members that were against the Police Department, at that time, why even the Council Members that voted against the Retirement Package.. OOH THAT'S RIGHT, YOU CAN'T, THEY HAVE BEEN VOTED OFF THE CITY COUNCIL TODAY!!

BS Ranch

*Not being a Retired Employee, I am not positive on the Pay Cuts that were approved by the RPBA, especially in regards to the Holiday Time/Comp. Time. However I know that the Police Department took a TEN PERCENT cut in pay, and this was devastating for many to adjust to. This I do know first hand being friends with all my past work mates..