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Newport council approves pension changes for firefighters

Plan should save at least $325,000 a year in the short term, but structural changes could save millions over the long run, city manager says.

May 22, 2012|By Mike Reicher

Newport Beach firefighters will pay more toward their pensions, and newly hired firefighters will receive less in their retirement, according to a union contract the City Council unanimously approved Tuesday.

With the increased contributions and a less generous retirement plan, Newport joins a growing roster of California cities reforming their pensions and saving long-term employment costs.

"This is about finding balance about what is fair for our dedicated employees, and what is fair for taxpayers," said Councilwoman Leslie Daigle.

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Under the new agreement, current firefighters will eventually pay 9% of their compensation toward their pensions, up from 3.5% of their base pay today. The increase will be phased in over two years, with the contract expiring in June 2014. Newly hired firefighters will pay a full 9%.

"That's a significant impact to the men and women who serve this city," said Councilman Keith Curry.

The plan should save at least $325,000 a year in the short term, but the structural changes could save millions in the long run, City Manager Dave Kiff said.

The contract also changes the way firefighter pensions will be calculated. Instead of basing their pensions on a percentage of their highest annual compensation, new hires will have to average their three highest years, smoothing out the problem of "pension spiking."

A handful of firefighters sat in the audience at the council meeting, but did not address the council.

New firefighters will accumulate about 2% a year toward their retirement, with an expected retirement date of 50 years old, while current firefighters can accumulate 3% — the most expensive plan available. Based on state law, the city is unable to change the current employees' plans.

Other workers in the Fire Department who are not firefighters also agreed to pay more toward their retirements, ending up at 8% of their compensation.

The changes will help pay down the $256.6 million the city has promised, but not yet funded, for its current and retired employees' pensions.

In other matters, the council reviewed the city's 2012-13 capital improvement budget and tentatively approved $19.6 million in new projects, including about $3.6 million from discretionary funds. The largest amount budgeted will go toward the city's parks, harbor and beaches.

The council also approved about $210,000 in grants for special events in the city. Council members negotiated on the dais and voted to give more to some events and less to others.

They gave more to the Newport Beach Film Festival than city staff recommended and less to the Newport-Mesa Spirit Run, an annual fundraiser for public schools. In the end, the Film Festival will receive $125,000 — the same amount as last year.

Daigle and Mayor Nancy Gardner dissented in the special events vote, with Gardner criticizing the process and Daigle saying she supported the Special Event Advisory Committee's recommendations.

mike.reicher@latimes.com

Twitter: @mreicher

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