How overgenerous city pensions make cities sacrifice public safety programs: a Southland case study

The City of Los Angeles has had to consider laying off police officers because of a budget shortfall. But L.A. could save nearly $400 million per year by eliminating a rich subsidy for retired city employees that was rendered redundant by subsidies provided by the federally-funded Affordable Care Act in 2010 and state-funded Middle Class Subsidies in 2019. David Crane of Govern California, in a letter to state legislators, explains the problem.

Dear Legislators,

Yesterday, LA's City Administrative Officer announced the city's budget deficit could reach $400 million to $600 million by the end of the current fiscal year.

According to page 201 of LA's Comprehensive Annual Financial Report, LA spends $398 million per year supplying health insurance subsidies to retirees under the city's other post-employment benefits (OPEB) program. LA could eliminate nearly all that spending by adopting Glendale's 2015 OPEB reform, which took full advantage of subsidies provided by the federal government. Elimination of OPEB got even easier after the state government launched a Middle Class Subsidy Program in 2019. All the information is at Covered California, the state's easy-to-use exchange.

There is no reason for LA to cut programs in order to fund redundant subsidies for retired city employees.

David Crane
President
Govern For California

This article originally appeared in Fox and Hounds Daily.

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Photo taken by Artem Bali.