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San Diego Council Rejects Sanders’ Pension Proposal

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Aired 4/19/09

San Diego Mayor Jerry Sanders failed to get the support of the city council to reform non-public safety pension plans. After more than eight hours of debate and two closed door sessions last night, the Council rejected the Mayor's push to impose pension plans more like those in the private sector. KPBS reporter Alison St John has more.

San Diego Mayor Jerry Sanders was elected with a mandate to get the city back on an even keel financially. Four years ago, a billion dollar pension deficit threatened to plunge the city into bankruptcy, and Sanders campaigned on a promise to cut pension costs.

He wanted to negotiate a new kind of hybrid pension plan. It would combine the traditional defined benefit, or guaranteed, pension with a defined contribution pension plan, like the 401Ks offered by many private companies.

Sanders: Our new retirement system for non public safety employees will reduce costs and lower the city's financial risks

If the city had gone forward with the mayor's plan it would have been the first city in the state to make the change to a defined contribution pension for its employees.But the city's labor unions fought the plan tooth and nail.

They pointed out the state of Alaska experimented with converting its pension plan for public employees, and now, three years later, it is trying to reverse course. Employees discovered their pensions were tens of thousands of dollars lower and they couldn't afford to retire.

Ann Smith is the attorney for San Diego city's white collar workers. She says a high percentage of the city's workforce will retire in the next ten years, and recruiting good people to replace them will be a challenge. Defined benefit pensions are the main incentive, she says, to encourage people to work in the public sector.

Smith: It's one of the chief ways that we can recruit people because we don't have bonuses, we don't have profit sharing we don't have stock options, this is something that we do have and we need to preserve that. 

But San Diego is not the only city in California being hit hard by falling revenues and ballooning pension costs. Cities and counties around the state have been watching this debate closely to see what happens in San Diego. At this point it looks as though the debate has been postponed for another year.

Alison St John, KPBS News.

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