July 28 (Bloomberg) — Los Angeles officials violated the law when they rolled back pension benefits for new employees in 2012, the city Employee Relations Board ruled, jeopardizing as much as $4.3 billion in projected savings over 30 years.
Leaders of the second-largest U.S. city failed to properly consult with municipal-employee unions before pushing through the changes in a 10-0 City Council vote in October 2012, the five-member panel decided today.
"The Employee Relations Board affirmed today the basic concept that one side cannot change a contract by itself," said Scott Mann, a spokesman for the Coalition of L.A. City Unions.
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Yusef Robb and Jeff Millman, spokesmen for Mayor Eric Garcetti, weren't immediately available for comment.
Without reducing pensions for new employees, Los Angeles faced a 45 percent increase in its contribution toward employee pensions and the unfunded liability of the fund itself, City Administrative Officer Miguel Santana said in a 2012 report.
The reduced pensions, along with raising retirement ages and income caps, would save $3.9 billion to $4.3 billion over 30 years, according to the report.
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