HUNTINGTON BEACH : Retirement Pay Policy May Lead to Grievance

The city’s Personnel Commission has asked an independent hearing officer to determine whether city employees may file a grievance against the city over their right to convert certain benefits into retirement pay.

In August, the state Public Employees Retirement System (PERS) notified city officials that it would not accept conversion of certain benefits to increase employees’ retirement pay for any period other than the 12 months before retirement.

Under the practice, known as “pension spiking,” employees convert the cash value of such benefits as unused vacation time and car allowances to their final year’s salary, which is used by PERS to determine retirement pay. PERS, however, ended most forms of the practice in July, 1994.

PERS’ interpretation of the city’s contracts with its employees would save the city millions of dollars that otherwise would have to be paid to retirees.

The city’s largest employee union, the Municipal Employees Assn., and the Management Employees Organization allege that PERS’ ruling is in violation of past labor contracts with the city. The two unions have filed a grievance, saying that their contracts are with the city, not PERS.

City administrators said the employees do not have grounds for a grievance because the issue of converting the benefits is a matter between employees and PERS. “We’re simply not taking a position on PERS’ decision,” said William H. Osness, personnel director.

Attorneys with employee unions argue that historically the city has not restricted benefit conversions to the 12-month period preceding retirement.

“At this point, we intend to do whatever we need to do to ensure that employees receive the benefits to which they’re entitled,” said John Sawyer, a Municipal Employees Assn. attorney.