ESCONDIDO, CA – Escondido firefighters said Monday they have agreed to cut retirement benefits for new employees by 33 percent, a concession that city officials say will rein in long-term labor costs.
The move follows identical pension rollbacks for firefighters approved by Carlsbad and Solana Beach in 2010.
Poway, San Marcos and Encinitas have also overhauled pensions for newly hired firefighters, but those cities increased the retirement age from 50 to 55 instead of lowering benefits. Oceanside and Vista have not changed retirement benefits for firefighters.
Momentum for pension overhaul has grown across the state since the economy cratered in 2008. Sharp decreases in tax revenue have made it painfully clear to cities that they can’t afford the 50 percent increase in pension benefits that most public employees received roughly a decade ago.
Benefits promised to existing employees can’t be taken away under state law, but benefits for new employees can be slashed. It’s called creating a two-tiered pension system.
Most cities establishing second tiers have rolled back benefits for new hires to where they were before the 50 percent hike, which follows recommendations made in 2009 by the San Diego County Taxpayers Association and a coalition of local city managers.
Escondido, Carlsbad and Solana Beach have followed those recommendations.
In those cities, firefighters on the first tier receive 3 percent of their top salary multiplied by their number of years served, while firefighters on the new second tier will receive 2 percent of their top salary for each year of service. The retirement age remains 50 for both tiers.
The change reduces the lifetime annual pension benefit from $48,000 to $32,000 for a firefighter who reached a top salary of $80,000 and worked for 20 years.
Last year, Escondido cut pensions for all new hires except public safety workers. The deal with firefighters was ratified by union members Friday and scheduled for City Council approval Wednesday.
Carlsbad and Solana Beach have created a second tier for all new employees.
Escondido Mayor Sam Abed vowed Monday to create a second tier for police officers as soon as possible. City officials began negotiations last fall on a new contract with police officers, but no deal has been reached.
“Ignoring $110 million in pension liability is irresponsible,” said Abed, referring to state estimates of how much more Escondido owes to cover future pension costs. “This is the most significant action the city can take. It will start lowering our liability quickly.”
Escondido’s move was praised Monday by the county taxpayers association, which has called slashing pension benefits the most effective way for cities to rein in long-term labor costs.
“This is definitely a great step for Escondido,” said Chris Cate, the association’s vice president.
But Escondido Councilwoman Olga Diaz said she was reluctant to join her colleagues in their staunch support of reducing pension benefits. Diaz’s husband is an Escondido police lieutenant, and thus is not affected by adoption of a two-tiered pension system.
Diaz said lower benefits might create morale problems by having two firefighters with sharply different pensions perform the same job, working side by side.
She also said it could cost Escondido talented firefighters and other workers, because those workers might choose other cities in the region that haven’t lowered benefits as much.
“If San Marcos is offering 3 at 55 and we’re offering 2 at 50, a highly qualified person will have a pretty clear preference,” she said. “This could cause more harm than good.”
But Abed said such concerns have been overblown because cities routinely receive significantly more applicants for open city jobs than they need.
“There is no problem whatsoever —- it’s all rumors,” he said. “People are waiting in line for these jobs.”
Diaz said she would have supported Escondido’s firefighters union, which has 84 members, if they had refused to agree to a second tier. But Diaz said the union’s willingness to accept a second tier means they must be satisfied.
Jeff Sargis, the union’s president, confirmed on Monday that members of the union ratified the deal last Friday. But Sargis declined to discuss any details of the new contract, which is a one-year deal that expires Dec. 31, until the council approves it Wednesday.
While union leaders could have refused to slash pension benefits for new hires, the council has the power to impose such changes without an agreement.
There was talk this spring among council members that longevity pay increases might be restored for firefighters, after Escondido became the only city in the county to eliminate those raises when the economy failed in 2008. But they aren’t included in the new contract.
Abed said the city still hopes to eventually restore those increases, which are called “steps.”
Firefighters were spared a 3 percent compensation cut that all city employees except public safety workers were forced to accept last year. And Abed said police officers would probably also be spared those cuts.
From The North County Times.