CalPERS Could Slash Benefits for 200 SoCal Workers

Last year, CalPERS made history when it voted to cut benefits to a handful of city retirees in Loyalton, California. Now, the pension fund is poised to do it again. Only this move will affect a much larger group of workers: some 200 former employees of a since dissolved job training program created by local governments in L.A. County.

The at-risk pensioners once worked for the East San Gabriel Valley Human Services or LA Works. Los Angeles County suspended its work with the organization over billing disputes back in 2014.

Once the group disbanded, the checks to CalPERS stopped rolling in. The consortium’s four original member cities—Azusa, Covina, Glendora and West Covina—were promptly sent letters, with CalPERS asking them to make up the difference.

“Our view is they have a moral and ethical obligation,” said CalPERS General Counsel Matthew Jacobs. “They’re the folks who put this thing together, and it’s their employees essentially.”

But the cities say they have no such obligation, as LA Works was a 1979 program created outside of their purview. They contend that the only pension obligations they’re responsible for are their own.

Unless CalPERS and the cities can come to some sort of agreement, it looks like the 197 people who once worked for the job training program will see their pensions slashed by as much as 63 percent. A vote on benefit reduction will be held by CalPERS on March 14.

Meanwhile, another storm could be brewing. In a report last month, CalPERS singled out two other organizations that are delinquent on their payments and at risk of benefit cuts: the Independent Cities Association and the Niland Sanitary District in Imperial County. With the pension fund’s December decision to cut its projected investment rate, the difficulties in paying the fund have gotten even harder, so you can expect more to follow.


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