In a bizarre twist on pension reform, Antioch leaders are considering increasing retirement benefits for future employees hired from other cities.
The misguided move would raise city pension costs for decades. And it would reverse recent changes City Council members had touted as evidence they were serious about controlling retirement expenses.
To make the latest move, city officials must act before new statewide pension laws take effect Jan. 1. So the proposal has been rushed onto Tuesday night's agenda without any cost analysis.
It's wrongheaded -- especially in a city like Antioch, which is already drowning in $59 million of debt for underfunded retirement benefits, an amount equal to 2½ years of base payroll.
Here's how the pension benefit change would work: Current Antioch police are entitled to start as early as age 50 collecting pensions equal to 3 percent of top salary for every year on the job. For example, a 30-year veteran would collect a starting pension of 90 percent of top salary.
But under a recent contract, police hired after Sept. 1 would collect less. They would have to wait until age 55 to collect the same 3 percent benefit. And the salary on which the pension is based would also be less in most cases.
The contract change was a modest attempt to reduce pension costs for new hires. But after Antioch leaders struck the deal with their police, Gov. Jerry Brown signed new statewide laws that
Under the new state laws, lateral hires will earn pension benefits in effect at the end of this year. In Antioch, as it stands now, that would be the benefit that took effect Sept. 1. But Police Chief Allan Cantando wants to bump that back up to the original, more generous -- and more costly -- pension benefits that take effect at age 50.
If the council makes that change, it would affect all future Antioch hiring of officers currently on the job in other communities. The effect would be felt for decades.
City officials claim the change is needed to help Antioch compete for experienced cops. But a comparison shows Antioch pension benefit levels match or exceed 10 of 15 nearby cities. Moreover, the officials made no effort to figure out the cost of the change. Long-term, the city needs more cops, not more-expensive cops. In a community with very limited resources, Antioch can't have both.
Compounding the problem, once the issue of attracting police for other cities was raised, Antioch officials starting considering the same issue for other employees. Workers in other jobs who were hired before 2007 can retire at age 55 percent with 2.7 percent of their top salaries for every year on the job. Those hired since 2007 are entitled to 2 percent for each year worked.
If the city were to reverse course, it would have to grant the higher benefits to the eight employees hired since 2007. For five years, those workers and the city have been contributing to the pension plan assuming they would be collecting the lower pension benefits.
Retroactively increasing the benefits would create additional pension funding shortfalls, thereby instantly driving up the city's unfunded liability. It would also increase the cost of future benefit accruals. Again, this would be locking in higher costs for decades. And, again, the price tag remains a mystery.
This is irresponsible. City Manager Jim Jakel and his human resources director, Michelle Fitzer, issued a convoluted, almost incomprehensible, staff report for Tuesday's meeting that dances around the key issues.
Moreover, Jakel makes no recommendation. That's disappointing. After years of trying to rein in city compensation costs as Antioch revenues have plummeted, he should be tabling this idea, or, at least, clearly identifying for the council why it's so bad.