Three Loyalton retirees will receive about 83 percent of the pensions they were promised for careers in the tiny Sierra County town’s government, according to settlement agreements the town released Wednesday.
The payments resolve a lawsuit retirees John Cussins, Patsy Jardin and Donald Yegge filed after the California Public Employees’ Retirement System reduced their benefit checks by about 60 percent in November 2016.
CalPERS reduced the checks after Loyalton stopped making required payments to the pension fund.
CalPERS still pays the retirees about 40 percent of their pension benefits. The City of Loyalton agreed to pay a little more than that, along with lump sum payments for each retiree, according to the settlement agreements.
Loyalton Mayor Sarah Jackson said at least four of the five city council members who let the retirement payments lapse have been replaced.
Jackson said the new council is more committed to fiscal discipline, which it will need to be to afford the roughly $3,500 monthly payments for the retirees the agreements call for. The town’s annual operating budget is about $1.25 million, she said.
“This council’s been very committed to try to complete the settlement in a way that is workable for all people,” Jackson said. “We all concur that it was unfortunate that this happened in the first place, so we’re just trying to make the best of the situation.”
The three lump-sum payments total about $74,000, according to the settlement agreements. The city released the agreements in response to a California Public Records Act request. The agreements show the last signatures were added June 6 to the settlements, which were subject to the council’s approval at a June 18 meeting.
Jackson said the town, which has around 750 residents, is selling a mini-excavator and an equipment trailer and taking a close look at the rest of its inventory to come up with the money.
Like hundreds of other local governments in the state, Loyalton paid CalPERS to administer its workers’ pensions. CalPERS invests the payments and disburses benefits.
After Loyalton stopped making periodic payments in 2013, CalPERS told the town it would have to pay about $1.7 million to ensure the fund could keep paying the retirees’ pensions in full.
Loyalton didn’t pay, so CalPERS reduced the retirees’ benefits. For a while, the town paid the difference — about $5,000 per month — but then stopped at the end of 2017.
The retirees initially named CalPERS in the lawsuit but the $365 billion fund was quickly dropped from it.
The decision to trim Loyalton pensions affected only a handful of retirees, but it startled CalPERS members around the state because it marked the first time that CalPERS cut a former government worker’s pension.
CalPERS again reduced pensions a few months later, in March 2017, for nearly 200 former employees of a defunct job training agency that had been backed by four cities in Los Angeles County. That organization also quit making payments to CalPERS.
CalPERS members expressed anxiety about the benefit cuts in the pension fund’s 2017 survey. It showed declining confidence in CalPERS, particularly among local government executives.
Loyalton only has four retirees eligible for CalPERS pensions, including the three who sued. One more employee likely will become eligible in the future, Jackson said. She said she doesn’t know what the town will do when that person retires.