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 was rushed onto last Tuesday's agenda, and council members unanimously agreed to discuss the idea further on Dec. 4.
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 retire as early as age 50 and collect pensions equal to 3 percent of top salary for every year on the job. For example, a 30-year veteran would receive 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 usually be less.
But after Antioch adopted that change, Gov. Jerry Brown signed new statewide legislation that further reduced the benefit level for new rookie cops. More significantly in this case, the state legislation froze benefit formulas for experienced officers hired from elsewhere in the state.
Under the new state laws, so-called lateral hires recruited in the future will earn pension benefits in effect at the end of this year. In Antioch, as it now stands, that would be the benefit that took effect Sept. 1. But police Chief Allan Cantando wants to bump that back up to the previous, more generous -- and more costly -- pension benefit that starts at age 50.
Such a change would affect all future hiring of officers currently working in other communities. If, for example, Antioch tried to lure someone from another city 10 years from now, it would have to provide the higher pension benefit.
Cantando claims the change is needed to help Antioch compete for experienced cops. But a city survey found the current benefit levels already match or exceed those offered to lateral hires in 10 of 15 nearby cities.
If Antioch officials need sweeteners in the short term to lure veteran officers, they should consider cash incentives that won't be mandatory for lateral hires years from now. 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 from other cities was raised, Antioch officials considered the same issue for other recruiting. 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, not only to future lateral hires from other cities but also to eight employees hired since 2007. For five years, those eight workers and the city have been contributing to the pension plan based on lower future benefits.
Retroactively increasing the benefit formula would create additional pension funding shortfalls, thereby instantly driving up the city's unfunded liability. It would also increase the cost of future benefit payments. Again, this would be locking in higher costs for decades.
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 danced around the key issues. (By the way, Fitzer would personally benefit because she is one of the eight employees.)
Moreover, Jakel made 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.