The council's action, which included a reduction in pension benefits for new employees, occurred just a day after a group of citizens submitted petitions signed by 3,124 people to put a pension-reducing initiative on the November ballot.
The near dead-heat in the push for pension reform came amid growing cries in Menlo Park to reduce the rapidly rising costs of public employee pensions, which stand in sharp contrast to private sector benefits that have dwindled for many years, including during the economic downturn. This negative environment created a fertile field for volunteers who on May 3 presented 3,124 signatures to Menlo Park City Clerk Margaret Roberts, far more than the 1,882 signatures needed to force the council to either OK the initiative or put it on the November ballot.
Both measures would establish a so-called "two-tier" pension system, meaning new workers can retire at age 60 with a maximum of 60 percent of pay after 30 years of work, rather than at age 55 with a maximum of 81 percent of pay. The council can impose the lower benefit in late 2011 if the city negotiates the same deal with middle-management employees when their contract expires in 2011 or the council imposes the terms on those employees.
The May 3 imposition also freezes salaries, and could bump up employees' contributions to future pension and health care costs.
The initiative differs from the council's action in a significant way: If approved by voters in November, the initiative will force the city to obtain voter approval for any enhancement of pension benefits.
Since the pension provisions apply to new employees only, they would not reduce pension costs immediately. It will take several years before the city will realize savings.
And while the initiative deals with a group of workers who earn an average of about $66,000 a year, it does not apply to pensions of police officers, who earn an average of more than $100,000 a year and can retire at age 50 after 30 years of service at a maximum of 90 percent of their highest pay. We suspect the initiative supporters wanted to avoid the near-certain backlash if they included police pensions in their reform, but in the process missed reducing more than half of the city's pension obligations.
Still, it is time for Menlo Park and most other cities in California to rein in out-of-control pension costs. Perhaps the initiative will resonate with other jurisdictions that are struggling to meet their growing pension obligations, showing them that residents can take control of the process. In this effort, about 100 volunteers were concerned enough to get out and do something about it. Maybe they will notice in Sacramento.