Long Beach City Council members will vote later this month to borrow $2.7 million to cover separation payments, the latest move to pay down more than $32 million still owed to former employees and retirees.
Officials said they are forced to borrow to pay for accrued time owed because reserves have been drained in the past decade due to mismanaged budgets and exorbitant contracts. The bond would cover the first installment of retirement payouts and additional retirements expected in the next 10 months.
City officials said they are required to award payout obligations from previous contracts.
“The payouts do not follow exactly what’s written in the contract. Some hours we’re allowing to be paid out are higher than what the contract allows,” Long Beach Comptroller Inna Reznik said at a public hearing Tuesday on the bond proposal. “Moving forward, we apply a much higher level of scrutiny than what was ever applied. You can see amounts included that were authorized long before I started with the city.”
A state comptroller audit last year found the city had a history of payouts exceeding limits on vacation and sick time to employees, beyond caps of 50 vacation days and 30% sick time.
The audit found a dozen management employees were overpaid nearly $750,000, and the city failed for 25 years to correct its policies on payments that were inconsistent with city and union contracts.
The city has paid more than $15 million in the past eight years to fund separation payments to employees, police and firefighters.
The city council will vote at its Sept. 15 meeting on the bond, which includes payments to former members of the police department. Former Acting Police Commissioner Ed Ryan is owed $215,000 for fiscal 2020-21, and former Police Commissioner and Acting City Manager Michael Tangney is owed $50,000 after receiving drawdown payments in previous years. Police officers have typically been paid their full amount of accrued time.
Without bonding, the amount is equivalent to a 10% tax increase, but the bond is not expected to change the tax rate, officials said.
"The goal is to stop bonding for separation payments, and that’s what the long-term plan is," City Council president John Bendo said. "This isn’t flipping a switch. We're looking at the financial structure as a whole, rather than doing one-offs."
Long Beach City Manager Donna Gayden said the city is working to implement a state recommended timekeeping system to monitor hours works and time owed.
“These were obligations made before we arrived.” Gayden said, who was hired as city manager in February. “Without a good timekeeping system, we can only go by so much.”