For decades, police officers and firefighters in the city of Sacramento have paid nothing out of pocket toward their retirement accounts. Instead, City Hall has picked up the bill.
It's a common arrangement, negotiated years ago in lieu of raises.
It's also a benefit both city officials and labor leaders expect will be targeted during budget talks as the city's deficit persists and public pressure mounts to rein in the costs of public employee pensions.
A report by city Auditor Jorge Oseguera last week showed the city could save $7.4 million in one year by requiring police, firefighters and top management officials to pay 4 percent of their salaries into their CalPERS retirement funds - the same as other city workers.
That savings represents roughly one-fifth of the city's projected deficit for the upcoming fiscal year.
Sacramento's overall contribution to CalPERS has jumped by more than 50 percent in the past five years alone, comprising an ever-larger chunk of the budget obligations. The total contribution is expected to rise again next year to make up for market losses absorbed by the California Public Employees' Retirement System.
Momentum at both the state and local levels is building toward mandating that all public workers pay into the CalPERS system.
Gov. Jerry Brown's recently released pension reform plan proposes to prohibit cities from covering employee contributions into the retirement fund.
In Sacramento, that means City Hall workers who now contribute 4 percent of their salaries would need to kick in 7 percent. Police and firefighters would contribute 9 percent of their pay. Those amounts could be renegotiated in new labor contracts.
Even if employees paid 100 percent of their designated share of pension costs, however, the government entities they work for would continue to contribute as well. Today, the city of Sacramento makes pension contributions totalling 14 percent of wages for workers not in the public safety sector. For public safety workers, that contribution jumps to 31.6 percent.
Many area cities and other local government employers already have cut back on pension contributions.
Members of the union representing Sacramento Metropolitan Fire District firefighters voted last month to begin paying into their retirement funds, a move aimed at helping the district save $28 million over the next three years.
In Folsom, the city's police officers and Fire Department middle management recently began paying 5 percent of their salaries toward their pensions. By next year, those employees will chip in 9 percent of their salaries, which will save the city $840,000 a year, officials said.
And in West Sacramento, where police and fire personnel don't pay into their pensions, city budget officials have "indicated to all bargaining units that having employees pay some or all of their member contributions (into CalPERS) will be an item that will be on the table" during talks, said Phil Wright, the city's director of human resources and labor relations.
All of Sacramento City Hall's unions are under contract - some as far out as next year and beyond - and those contracts would need to be reopened for city officials to gain pension concessions from the public safety unions.
Budget officials have asked the city's unions to discuss their contracts before the start of the next fiscal year in July. The bargaining units know that "health care, compensation and pensions are big factors in what's driving the budget gaps," said Assistant City Manager Patti Bisharat.
Both the city's police and fire unions said they were willing to discuss adding pension contributions.
"Pension reform is going to happen, whether you like it or not," said Brent Meyer, head of the Sacramento Police Officers Association, which agreed in 2009 to delay raises and is under contract until 2013. "We have to be part of the solution, but we need to do it over the (negotiating) table and not just as a reaction to one year's budget."
Jaymes Butler, head of the city's firefighter union, said his organization is "willing to sit down and talk and do what we have to do to help the city get through this budget." Under a 2009 deal that saved dozens of jobs, firefighters have had their salaries frozen for nearly two years, and they won't get a raise until January 2012.
Managers at City Hall, who are not organized but may soon be, also do not pay into their pensions. That arrangement was made because employees promoted to management positions can no longer collect overtime. The lack of a pension contribution helps make up the difference in take-home pay.
"We ought to look at (pension contributions) and they ought to be on the table as we honor the collective bargaining process, especially when we have the fiscal doom and gloom of this magnitude," said Councilman Kevin McCarty.
