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Mar 2011
LAPPL comments on the retiree healthcare subsidy

In response to Mayor Villaraigosa’s public request that the Los Angeles Fire and Police Pension (LAFPP) Commissioners reject a proposed increase to retiree healthcare subsidies, the following commentary was presented to the LAFPP Board of Commissioners, on Thursday, March 3, by Director Corina Lee on behalf of the Los Angeles Police Protective League:

The Mayor and other politicians still do not understand that the LAFPP pension commissioners’ fiduciary responsibility and obligation is to the pension fund and the beneficiaries of the fund, who are retirees. When the Mayor makes disingenuous statements that the sworn retiree health subsidies will cost the City $4.8 million, it is extremely misleading. The Mayor fails to state that the subsidy will be amortized over approximately 24 years. Beginning in July 2012, the estimated cost to the City will be approximately $200,000 a year. The Mayor’s intention seems to be to intimidate the Board using his political influence.

The 7% increase will not cover the entire increase of medical costs, which is approximately 10%. What the Mayor fails to recognize and acknowledge is that the LAFPP Board’s actions over the last few decades has led to the pension fund being one of the best funded in the country at 91.6%, which is approximately $14 billion. The Board also abides by best practices, policies and procedures that other funds should adopt. Since July 2010, the rate of return on investments in the pension fund has been 19%. This pension Board has always understood and acted in the best interest of the fund and the recipients of the fund when making its decisions. There are 142 retirees on Tier 1 who receive an average of $2,000 a month. If subsidy increases are not granted, the retirees would have to make up the difference out of their pension checks. Retirees will have to make difficult decisions as to whether they will pay for their medical increases or rent, electricity and food. That is a fact.

The Mayor has chosen to target and attack retirees who do not have the resources or collective voice to fight back in order to maintain what was promised to them after a lifetime of dedicated service to the City of Los Angeles. Only if the Mayor had threatened children would these actions be more despicable. Our retirees deserve what was contractually promised to them in their golden years.



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