The Sierra Madre Police Association’s current labor agreement expires in one week; ending the absurd practice of having taxpayers pay the employee’s share of pension benefits would save the City approximately $200,000 a year.
The below depicts a breakdown of the benefits cost for three Sierra Madre police officers:
Job Title Employee’s Pension Share Employer’s Pension Share Health
Sergeant $4,177 $33,887 $13,994
Sergeant $4,112 $33,368 $16,401
Sergeant $4,112 $33,368 $15,429
(Mod: Those numbers are based on the figures found in the "total benefits" column below, which is the next to last one located on the right. )
As you can see, the employee’s share of pension benefits is much less than the employer’s (taxpayer) share. However, Sierra Madre police officers, along with most other City employees, are not even required to pay that amount, as current labor agreements require that taxpayers pick up the employee’s share too!
You read that right, many city employees can receive extremely generous pensions at literally no cost.
But wait, it gets better (for city employees, taxpayers not so much.) On page 5, section 3 of the current MOU (link) states that: "The City will include the EPMC (employer paying employee’s share) as part of the “salary subject to PERS.”
This means that not only do Sierra Madre employees have to contribute nothing towards their pension, but when it comes time to calculate their pension they get to include that amount that they should be paying – but taxpayers are paying instead – as part of their pensionable compensation.
So in the example above, the first sergeant made $107k in pensionable pay.
If he decided to retire now and had worked 30 years, his pension would be 30 * 3% * 107k = $96.3k.
But his pension is not just based on his actual highest pay, he gets to include “his” share of his pension payments, which has been paid by taxpayers instead. So his pension would be 30 * 3% * 111.1k = $100k.
It’s the best of both worlds – he gets his pension for free and the salary his future pension will be based off of appears to be lower than it actually is, while working.
While the Pension Reform Act of 2012 correctly banned this practice for new hires beginning in 2013, existing employees remained untouched. Nonetheless, the City of Sierra Madre can end this practice for all employees when it comes time to sign a new MOU. Since the current one ends on June 30, now is the time to do just that.
The total cost of this practice for all city employees was $182,845 in 2013 – a number which was mathematically guaranteed to rise in 2014 and 2015, despite the final numbers having not yet been released.
Mod: Dropping approximately $200k in unnecessary pension costs to the taxpayer would save the equivalent of a full 1 percentage point of the UUT all by itself, each and every year. But does City Hall want to make that effort, or would they prefer instead that you conveniently vote yourself a big utility tax increase? In the process having you continue to pay all city employee pension costs (including the part employees should pay be paying for themselves), because it would be less confrontational and therefore easier for them?
Will a Sierra Madre resident be considered for this job?
Or will current City of Sierra Madre hiring practices hold and jobs like this remain closed to residents?