By David Zahniser

Hoping to avoid layoffs and furloughs, a new plan would cut pay raises for two years to employees and offer retirement to some.

June 23, 2009

Looking to avoid the need for layoffs and furloughs, Los Angeles Mayor Antonio Villaraigosa and the City Council are weighing a plan to offer early retirement to thousands of city workers, some of whom would receive an incentive of at least $15,000 to leave.

As it attempts to close a $530 million budget gap, the mayor's bargaining team hopes to reduce the workforce by 2,400 while giving no pay increases for most civilian employees in the next two years, according to several sources familiar with the confidential salary talks.

Once that two-year period is over, however, those same workers would receive six pay increases between July 1, 2011, and Jan 1, 2014, ranging from 2.25% to 4%, most of them delayed from their current contract, according to a draft proposal obtained by The Times. Those workers also would receive an extra cash payout equal to 1.75% of their salaries in 2012 and 2013.

The proposal represents a shift from the council's decision earlier this month to pursue employee furloughs, which would have forced thousands of workers to take every other Friday off without pay.

Behind closed doors, the city's Executive Employee Relations Committee -- a panel composed of Villaraigosa and four council members -- has been negotiating an early retirement plan with the Coalition of L.A. City Unions, which represents roughly 22,000 municipal workers.

The committee is scheduled to meet again today and could forward the plan to the coalition for a vote.

A report submitted to the committee last week said the early retirement plan could cost taxpayers up to $78.5 million to cover the sick pay, vacation pay and cash incentives that would be owed to 2,425 departing workers.

That figure does not include additional pension payments that those workers would receive.

Councilman Bernard C. Parks, who also serves on the committee, would not discuss specifics of the proposal, but voiced fears that the city would not be able to cover the increased pension cost of workers who retire before they are eligible.

"I don't think [the pension system] can afford it," he said.

Villaraigosa also would not discuss details, but signaled that additional payments by city workers toward the pension system could cover the cost of early retirement. "What I said from the beginning was, it's going to be fully paid for," he said.

To encourage older workers to leave, the city would increase its contribution to the pension fund for workers who were hired before 1983. Furthermore, those who stay would see their own annual pension contribution increased from 6% to 6.75% in July 2011, coinciding with their first raise in two years.

Union representatives met Monday afternoon to discuss the early retirement plan with acting City Administrative Officer Ray Ciranna. A representative of the labor coalition also would not characterize the talks.

"Our number one goal throughout these negotiations has been to preserve city services to the greatest extent possible given the economic climate and protect the city workers that we represent," said coalition spokeswoman Barbara Maynard.

The draft proposal obtained by The Times would offer early retirement to workers who are as many as five years away from retiring. The pact would not apply to police officers, firefighters and employees of the Los Angeles Department of Water and Power.

Although Villaraigosa has repeatedly called for "shared sacrifice" by city workers, the draft proposal acknowledges that those who work in parks, libraries and other nonpublic safety roles will likely be asked to absorb a bigger financial hit.

Any early retirement plan would need to be approved by the council and ratified by members of the affected unions.

To ensure that the proposal saves the city money, Villaraigosa and the council would have to ensure that they do not replace many of the departing workers.

No more than a third of the 2,400 employees could be replaced over the next five years, according to the plan.

Behind the scenes, union leaders also have been trying to secure a written promise from the city's negotiators that no furloughs or layoffs will occur in the next two years.