Voters to decide future City Council pensions

Yorba Linda's 18-year practice of contributing cash to two retirement plans for most City Council members could come to an end, depending on voter sentiment in November, when residents will vote the governing body's pension benefits and other perks up or down.

One of the current contributions is for a “defined benefit” plan based on council members' monthly $500 salary through the Public Employees Retirement System (PERS) for members not already retired under PERS.

A minimum of five years of PERS-covered service is required for a lifetime benefit based on the single-highest salary year for current council members. The benefit is based on a three-year salary average for new members seated after Jan. 1, 2013.

For years, the city paid both the employee and employer PERS contributions, and, since 2007, reported the city-paid 7 percent employee contribution as “earnable compensation.”

But beginning July 1, 2013, council members were required to contribute 2.5 percent

of salary for PERS retirement, a number raised to 5 percent for July 1-Sept. 30, 2014.

Members newly seated after Jan. 1, 2013, will pay 6.5 percent or other PERS-set amount, and all members taking office on or after Dec. 3, 2014, will earn a $525 monthly paycheck.

The other current city payment is used by most members for a “defined contribution” plan, with cash going into a 457 account that's similar to the more widely known 401(k) account.

Described in a resolution approved by a 5-0 council vote in 2013 as a “cafeteria plan” benefit, the city contributes $1,095 monthly per member that can be used as a health insurance premium or placed in a 457 account.

Since most members are either retired under Medicare or other retirement health plan or receive health insurance in their full-time employment, nearly all have been putting the entire amount into 457 accounts.

The rare exceptions were a few past self-employed members who used some of the city-supplied cash to pay for health insurance and put the residual amount into 457 accounts.

The current $1,095 monthly benefit is the same granted the city's full-time employees. State law limits council salaries to a formula based on a city's population, but benefits are allowed up to the maximum granted a city's management employees.

In recent years, council members have bragged they haven't increased their salaries, but every year since 1996, the “cafeteria plan” benefit, mistakenly called a “health benefit” by many council members, has increased the same amount allowed full-time employees.

From 1996 to 2010, council benefits were slipped into an annual resolution approving compensation for management employees and placed on meeting agendas under the “consent calendar” with various routine items combined for a quick, single vote.

Fifth-term Councilman Mark Schwing, who cast one of three votes for the added council benefits in 1996, was the lone vote against putting the issue on the Nov. 4 ballot.