Pass: 158,927 / 75.1% Yes votes ...... 52,662 / 24.9% No votes

See Also: Index of all Measures

Summary Prepared by Ballot Simplification Committee:

THE SITUATION:

Pension Plan funding is from employee contributions, City contributions, and Pension Fund investments. There are five Plan tiers. New employees currently become members of Tier 5, which provides:

• A minimum 50% pension at age 50 with 20 years service and maximum 90% pension with 33 years service;
• Required employee contributions of 8% or 9% of salary with no contributions for retiree health benefits; and
• A pension based on the single highest year salary.

This measure would create Tier 6 and make other Plan modifications. Tier 6 would apply to Plan members hired on or after July 1, 2011 and would provide:

• A minimum 40% pension at age 50 with 20 years service and maximum 90% pension with 33 years service;
• Required employee contributions of 9% of salary plus an additional 2% of salary to help offset the City'S contribution toward retiree health benefits; and
• A pension based on the highest two year salary average.

You want to establish a new pension tier for new sworn employees in the Fire, Police and Harbor Departments and make other modifications to the Plan.

A NO VOTE MEANS:

You do not want to establish a new pension tier for new sworn employees in the Fire, Police and Harbor Departments and make other modifications to the Plan.

Fiscal Impact from Miguel A. Santana City Administrative Officer:

Based on studies conducted by the independent actuary for the Los Angeles Fire and Police Pension System, adoption of this measure will reduce the City's future pension costs for new sworn public safety employees. Assuming the City continues to hire public safety employees to maintain its current workforce, the City is estimated to save approximately $152 million over the next 10 years.

Official Sources of Information

• Full Text

Currently there are five benefit Tiers in the Plan for sworn employees of the Fire Department and Police Department, with Tier 5 also applicable to sworn employees of the Harbor Department. New sworn employees become members of Tier 5 and the majority of Plan members are in Tier 5.

The Plan is funded by employee contributions, returns on investments, and City contributions. During the recent recession, returns on investments declined sharply due to the downturn in financial markets. As a result, City contributions to the Plan have been increasing to make up the shortfall. This means less funds are available for other City programs, resulting in reductions in staffing and service levels.

This measure would create Tier 6 which would apply to police officers in the Police and Harbor Departments and firefighters in the Fire Department, hired on or after July 1, 2011. Significant provisions of Tier 6 compared to the current Tier 5 pension plan include a reduction in pension benefits for early retirement, setting employee contributions at 9% of salary rather than the current 8% or 9% of salary depending on funding levels, and requiring a 2% contribution from employees towards retiree health care. Following is a comparison of Tier 5 and Tier 6:

Minimum Age: Pension Rates: Employee Contribution: Employee Health Contribution: Final Compensation:

Tier 5 50 Min 50% with 20 yrs Max 90% with 33 yrs 8% or 9% 0% Highest one year average salary

Tier 6 50 Min 40% with 20 yrs Max 90% with 33 yrs 9% 2% to offset City health contribution Highest two year average salary

This measure would also provide other modifications to the Charter that would:

• Facilitate the City's ability to comply with changes to federal and state laws applicable to government pension plans.

• Authorize the Council to establish an Excess Benefit Plan. The Internal Revenue Code establishes limitations on pension benefits. In some cases this may impact the benefits received by members of the Plan. In such cases, the Internal Revenue Code also provides for the establishment of a "qualified governmental excess benefit arrangement." Such a plan currently exists in the City for members of Tier
  5. This measure would allow the Council to establish an Excess Benefit Plan for Tier 6 as long as it is substantially the same as the existing Excess Benefits Plan for Tier 5.

• Provide the Board of Fire and Police Pension Commissioners with the authority to establish and adjust funding policies.

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