Orinda, employees union at odds over retirement plan

0 Comments | Oakland Tribune, Jul 31, 2008 | by Aaron Morrison

Orinda's city employees' union and its City Council are at odds over the employees' retirement savings plan -- a hot button issue that has prompted an early start to contract negotiations.

The employees want inclusion in the California Public Employees' Retirement System -- a virtually hands-off penison plan some believe to be superior to their 401K plans. City Council members have been mostly silent on addressing their request until recently, employees say.

Once negotiations for a new contract begin -- likely in the fall, instead of the planned March -- union employees hope the city will have decided on a more desirable retirement option, rather than risk continued loss of potential candidates for vacant city positions -- or worse, some existing workers.

"I'd be out of here quicker than you can flick flies off of you- know-what," said police community services officer Scott Tracy, who believes council members just aren't hearing the union's message.

That message is that CalPERS would not cost the city any more money than the current plan. Union employees have proposed contributing more of their monthly salaries to CalPERS, with the goal of freezing the city's level of contribution, at least for the time being.

The city's concern -- entering into a contract with CalPERS would mean unforeseeable costs increases, as the city may not always be able to set its own level of contribution. City managers have consulted with CalPERS representatives to forecast what the plan would cost, that research is not done yet, City Council member Amy Worth said.

"One of the city's challenges is to provide a secure retirement program, balanced with the uncertainty of a program like PERS," Worth said.

Some union employees believe the city is nowhere such a balance on the matter. Todd Fierner, an Orinda public works inspector and employee liaison to the union, said this was made evident at a closed session City Council meeting July 15, where he said Councilman Tom McCormick suggested the city would agree to adopting CalPERS only if its contribution level would be frozen indefinitely.

"That's pretty ludicrous coming from a city official," Fierner said. "We were all taken aback by that. I can't speak for everybody, but I wouldn't lock into one contract forever." McCormick couldn't be reached for comment.

Fierner also said the city is having trouble filling vacant positions because many job seekers want CalPERS retirement benefits.

"It's costing the city. They have been trying to fill a planning position for a while. Three were interviewed and all three have declined the position," he said. "Two of them thought we had PERS."

The city has also been looking for a new public works director, who would oversee road and pavement rehabilitations projects and other public projects.

Councilmember Worth wouldn't attribute recruiting issues solely to CalPERS.

"I know that we are proceeding with recruitment of the positions," she said. "I haven't heard that we can't fill positions because we don't have PERS. I think that there are a lot of considerations when people come to work for any city."

According to CalPERS, the plan's "cost neutrality" is not as simple the employees say. Cities sign contracts with CalPERS, and fees the city pays are based upon several criteria.

"It's not one-size-fit- all," said CalPERS spokesman Edward Fong. "The key element of the cost of the retirement plan is the level of benefits."

A key benefit is that CalPERS' 200 investment professionals do all the fund management for the employees, Fong said. Many 401K plans require employees make their own decisions about where their money is invested; some union employees say this is a disadvantage to those who aren't investment-savvy.

"We don't have Warren Buffett investing for us," police community services officer Tracy said. "If you don't make the right decision, you're screwed."

The city does offer investment consulting services to its employees, Worth said.

Orinda, in its 23 years as an incorporated city, has never offered CalPERS to its employees -- part of a philosophy to maintain as much budget control as possible.

But some employees fear the same lack of control as they begin to think about their retirement.

"We're proud to work in Orinda. We don't want to see Orinda as a stepping stone to something else," Fierner said. "But an uncertain economy is not a real good 'why not.' "

Aaron Morrison can be reached at 925-943-8326 or amorrison@bayareanewsgroup.com.