L.A.'s tinkering with pension plans could present problems

Guess Band-Aids can only stretch so far in dealing with the city's fiscal mess. This summer, the mayor and City Council decided to freeze healthcare benefits given to thousands of cops and firefighters once they retire. Those benefits would not increase unless employees contributed more toward retirement from their paychecks. The tweak was supposed to save the city $44 million a year. But the LAT reports that a law firm hired by the Fire and Police Pensions board found that those benefits were already guaranteed -- and that the city has an obligation to cover the cost of rising healthcare premiums.

Since the opinion was released, at least one pension board member has called for a lawsuit challenging the city's decision to freeze monthly medical benefits for retirees. Meanwhile, civilian city employees are demanding a legal opinion on whether they too should be spared from limits on their retiree health benefits. The city's decision to cap the monthly medical subsidy was the single biggest step toward balancing this year's budget, saving $100 million this year once civilian workers are included, said City Administrative Officer Miguel Santana. The city's top budget official, Santana said the mayor and the council had "every right" to freeze the healthcare benefit at the existing level. "We committed to a majority of workers that if they want that benefit to grow with inflation, then they need to start contributing," he said.

Villaraigosa described the arguments set out in the pension board's legal opinion as "absolutely ludicrous and untenable."