News - February 2, 2011

Menlo Park pension reform may be delayed a year or more

by Sandy Brundage

The celebratory buzz that followed the passage of Measure L by a whopping 72 percent of voters in November died down in Menlo Park after voters realized approval was only the first step in a pension reform process that could take years.

The quandary: How to fill the city's 15 vacant positions when Menlo Park can't legally implement Measure L's limits yet?

Measure L raised the minimum retirement age for new public employees by five years to 60, excluding police officers, and also decreased maximum pension benefits by 0.7 percentage points to 2 percent of their highest annual salary averaged over three years.

Under this measure, a new hire who retired at age 60 after working for the city for 30 years would receive 60 percent of that average salary. Current employees can retire at age 55 and get 81 percent.

Henry Riggs, who helped bring Measure L to voters, said that state law requires the city to negotiate with the American Federation of State, County, and Municipal Employees (AFSCME) before it can impose lower benefits. According to his research, if the bargaining ends in a stalemate, and a contract is imposed, as happened last May with the Service Employees International Union (SEIU), the limits won't take effect until March 2012.

Menlo Park appears to have three options: A hiring freeze. Outsourcing to contractors. Or continue hiring at the old pension rates, which the city can't afford to sustain.

Council members Kirsten Keith and Peter Ohtaki asked staff to examine outsourcing in neighboring communities to gauge how well it might work in Menlo Park. Ms. Keith also questioned why the city interviewed arborists on Jan. 25, a position advertised at $7,000 per month, while the higher benefits were still in place.

Glen Rojas, city manager, responded that contractors are limited in what they can do before becoming public employees in the eyes of the Internal Revenue Service. The city then runs the risk of owing back taxes. The position can't be eliminated, he said, because of the workload. "Right now there's only one person supervising all tree crews," he said. "That's not sustainable."

Mr. Riggs sent an e-mail to the council in December suggesting a hiring freeze since the city expressed a firm commitment to the new benefit structure. "Put another way, when you realize you are in the most expensive widget store in town, why would you buy one more widget before crossing the street to the competitive store?"

Echoing that reasoning at the Jan. 27 budget meeting, Mayor Rich Cline said he was very sensitive to the 72 percent of voters who want the new pension structure implemented now and are not happy about the city advertising positions under the old structure.

"It seems like an affront to the movement that just happened," he said. "I'm not going to give you the answer, but I'll tell you I'm not going to support hiring and adding a bunch of new people to the mix."


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