The new plan was ratified by the Pleasanton City Council on Tuesday night at the end of a second public hearing on the new contract signed with Local 1974 of the International Association of Firefighters union, which covers LPFD's unionized employees.
The new contract will eventually cut the costs to the cities by $2.13 million, a savings to be shared equally by Pleasanton and Livermore, which operate the LPFD under a joint powers agreement.
Although other parts of the union's pension and retirement program will remain in place, including the option of retiring starting at age 50 with a pension equal to 3% of wages earned for every year of employment as well as full health insurance benefits, the new contract puts in place a two-tier benefit program for firefighters hired after Jan. 1, 2013.
Their pension plan will be substantially less, with health benefits restricted to a retired employee only, not a spouse as was currently provided. Also, once the retired employee becomes eligible for Medicare, that individual would go off the CalPERS health benefit program altogether.
Further changes for new hires after Jan. 1 that are being proposed by Gov. Jerry Brown could also reduce the retirement formula to 2.7% of wages at age 57, instead of 3% at age 55 as it is today.
The council voted 5-0 to accept the new contract agreement although Councilman Jerry Thorne said he opposes a two-tier program.
"I just don't like a two-tier system," Thorne said. "First, it takes a long time to have an impact."
He said firefighters, like everyone else, are living longer so their CalPERS benefits and retirement costs to the city will continue longer.
"But also, having two tiers (of employment benefits) in the fire department will create situations where there could be moral issues as well as issues among employees," Thorne said.
Outside consultant John Bartel, president and chief actuary of Bartel and Associates, who has reviewed and helped draft union contracts for Pleasanton for years, agreed that the savings from the new contract will take a long time to help reduce the city's pension liabilities, but said it's a start.
He said Gov. Brown's plan, which will be presented in detail Friday, could help restore fiscal sustainability in all state, county and municipal pension plans where generosity in earlier administrations created the costly pension system in place today.
As Gov. Brown outlined his plan, state pension reform would include caps on benefits, increasing the retirement age, making employees pay at least 50% of their pension costs, and stopping what it calls "abusive practices."
Although Bartel expressed support for the governor's proposed pension reforms, he said he would wait until he reads the plan in detail on Friday and sees what the state Legislature will do with it.
With the council's action Tuesday night, all city employees, including unionized municipal workers, police and now firefighters are contributing to their pension plans. Since September 2010, the firefighters' union members have been contributing 2% of their pension costs.
Management employees also are contributing, with City Manager Nelson Fialho voluntarily agreeing to pay 8% of his pay toward the CalPERS benefit plan two years ago, and other managers who are not unionized now doing the same.
Council members praised both the firefighters' union for agreeing to the new contract and city staff, including Fialho and Assistant City Manager Julie Yuan-Miu, who handled contract negotiations on behalf of both Pleasanton and Livermore.
Addressing the ongoing concerns over unfunded pension liabilities in Pleasanton, Councilman Matt Sullivan said, "We're not done yet, but we've made significant progress. I think our employees understand the issues, too."
Councilwoman Cindy McGovern agreed.
"I feel like we've been in negotiations for the last two years, first with the employee union contract, then the police and the firefighters tonight," she said.
"What's happened has been meaningful," she added. "All of the unions have made changes and everyone is contributing more."
"Unfortunately," she continued, "even with the council's decision to pay down a part of the unfunded liability, I understand that it will continue to grow and we have to work to figure out how to stop that."
Councilwoman Cheryl Cook-Kallio said that while all city employees have taken on more work during the two-year hiring and wage increase freeze, continuing that could lead to a decrease in the level of community services, which she doesn't think the public wants.
"Most people value the services our city provides," she said. "Some people say we don't have fires here very often and when they happen, they're usually small. But the fire chief tells me firefighters are called out daily. If someone has a stroke or heart attack or there's a suicide, it's the firefighters who respond."
"The fire department has an operating budget of under $14 million," she added. "That about $203 a year in per capita costs for Pleasanton residents. We have to think about that anytime we talk about decreasing services."
Mayor Jennifer Hosterman said the negotiation process between the city and its union representatives is "a balancing act."
"We really need to negotiate changes in a methodical, sensible way that makes sense for our city and public as well, and that's what we've done," she said.
At Tuesday night's council meeting, three speakers commented on the firefighters' contract.
Former Councilwoman Kay Ayala, citing Gov. Brown's plan to provide details of proposed statewide pension reforms on Friday, urged the council to delay its ratification.
But the council, by proceeding to ratify the contract, said no.
Bart Hughes called the firefighters' contract "an intergenerational transfer of wealth," explaining that employees and Pleasanton taxpayers yet to come will have to pay for the generous benefits currently being awarded.
City Council candidate Karla Brown asked why the firefighters' contract that expired a year ago was just now being approved.
"It's now August," she said. "Why has it taken so long? Why didn't negotiations start ahead of the time the contract expired?"