Menlo Park: Police forgo higher retirement benefit Menlo Park: Police forgo higher retirement benefit (June 30, 2004)

** In new labor contract, "3 percent at 50" provision would be put off for two years.

By Rebecca Wallace
Almanac Staff Writer

In two-year contracts forged during tough economic times, Menlo Park's police officers and sergeants stand to get a 4.3 percent salary hike this year. But they had to give something in return: they've agreed to put off implementing a new boost to their retirement benefits.

Currently, a "3 percent at 55" retirement formula is in effect through the state's Public Employees' Retirement System. It means that a retiring 55-year-old officer's or sergeant's pension is calculated by multiplying his or her years of service by 3 percent, then multiplying that number by his or her highest annual salary.

For example, a sergeant making the top (after the 4.3 percent raise) annual sergeant salary of $92,425 and retiring at 55 after 30 years of service with the department would continue to make 90 percent of his or her salary.

This year, officers and sergeants were scheduled to ascend to the "3 percent at 50" formula when their four-year-old contract expired June 30 and the next one began.

But tough times have meant that city officials are both cutting jobs and worrying about ongoing retirement costs. So after labor talks with the city, the officers and sergeants agreed to defer the switch to "3 percent at 50" until June 30, 2006.

"Both (bargaining) units were understanding of the situation and we were pleased to come to an agreement," personnel director Glen Kramer said.

Menlo Park Police Officer Glenn Raggio, president of the Menlo Park Police Officers' Association, said he didn't want to comment on the agreements until they were officially approved by the City Council, which is scheduled to happen at the June 29 council meeting.

Unlike a few years ago, when "we had a wave of retirees when we implemented 3 percent at 55," very few officers or sergeants were planning to retire this year at 50, Mr. Kramer said. There are two sergeants ages 50 or above, and if they plan to retire during the span of this contract the city will give them pension credit for having worked an extra two years, he said.

Under the contracts, officers and sergeants will get 4.3 percent raises effective June 27, and another raise of 2 to 3 percent 18 months later. The exact amount of the second raise will be determined by the local consumer price index, Mr. Kramer said.

The contracts affect the 38 sworn officers represented by the police officers' association and the nine sworn sergeants represented by the Teamsters 856 unit. They also include changes to health and dental plans and increases in uniform allowances.

In fiscal year 2004-05, the sergeants' new contract will cost the city an added $45,150, Mr. Kramer said. It would have cost the city an additional $85,900, but deferring the "3 percent at 50" formula saves $40,750, Mr. Kramer said.

The officers' new contract will cost an added $57,150; deferring the formula saves $138,600.

Even if no one retired in the next two years, the city still would have had to pay more with a "3 percent at 50" formula, because the rates the city contributes into the PERS program would have gone up, Mr. Kramer said.

Pension costs have been growing for Menlo Park and many other cities partly because of the stock market collapse in the dot-com bust, which has meant less investment returns for the state retirement system.

City officials expect to pay roughly $1.55 million in pension costs in 2004-05 and $2 million in 2005-06, Mr. Kramer said.

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