Mayor Sanders, Councilmembers Faulconer And DeMaio Agree To Pension Reform Proposal
Wednesday, April 6, 2011
The efforts to reform the City of San Diego's pension system moved another step forward this week when the mayor and two councilmembers agreed to a ballot measure proposing to move all new city workers, except for police officers, to a 401 (k) retirement plan. We talk to Metro Reporter Katie Orr about the details of the proposal, and how the compromise was reached.
The efforts to reform the City of San Diego's pension system moved another step forward this week when Mayor Jerry Sanders and Councilmembers Kevin Faulconer and Carl DeMaio agreed to a ballot measure proposing to move all new city workers, except for police officers, to a 401 (k) retirement plan. The compromise ensures that Sanders and Faulconer's proposal will not compete with DeMaio's measure during the June 2012 election. We talk to Metro Reporter Katie Orr about the details of the proposal, and how the compromise was reached.
Katie Orr, metro reporter for KPBS News
MAUREEN CAVANAUGH: The push to eliminate guaranteed pensions for city workers in San Diego got a little stronger this week. Mayor Jerry Sanders announced he's reached a compromise with city councilman Carl DeMaio, to combine their pension plan proposal. Supporters hope the joint plan will make easier for voters to understand and approve. But it's also making city firefighters and life guards, unhappy. KPBS metro reporter Katie Orr is here to explain. Katie, good morning.
ORR: Good morning, Maureen.
MAUREEN CAVANAUGH: First of all, if you could, remind us why the mayor and other members of the city council want to reform the pension system for city workers in the first place.
ORR: Well, pension costs have really become unsustainable for the city. This year they're about $230 million. And in coming years, they think that the pension costs could rise to more than $500 million. Which is a half of the city's operating budget. So it's just total lie unaffordable for the city, and the mayor believes something has to change.
MAUREEN CAVANAUGH: So what was the proposal that the mayor and councilman Kevin Falconer unveiled two weeks ago?
ORR: Well, the mayor and councilman Falconer were proposing a plan that would switch all new hires that were not involved in public safety, so not police, life guards or firefighters, all new nonpublic safety hires over to a 401K system like someone in the private sector might have, but leave the public safety workers on a pensions system. Right now, they can make and it would have also capped the city's over all payroll for five years, and it would have stripped union members of their right to vote on a labor contract. Now, if the their leaders and the city council agree on something, the union members can still vote to ratify that contract or not. This would take that away from them.
MAUREEN CAVANAUGH: So that was the proposal, that was the 50 proposal that the mayor and councilman Falconer came out with, but at that time, it was remarked that there was also another idea floating that had come out of councilman Carl DeMaio's office. What was he suggesting at the time about reforming city pensions?
ORR: Right. DeMaio wanted to eliminate pensions for all city workers, including police, fire, and life guards, which is pretty unheard of. Pretty much all public safety workers still do receive perceptions, he also wanted to put a cap on what he calls pensionable pay for existing city workers. That means it is essentially a pay freeze of their base salary. He says they could still receive bonuses, or profit sharing if there was any money available. But that money would not count towards their pension, their base pay would be frozen and that would put a stop to rising pension costs. And that was his sort of controversial plan that the mayor and Kevin Falconer didn't think was legal at the time. They now say they have changed the way that is worded and so they think that it is legally defensible.
MAUREEN CAVANAUGH: And so here comes the compromise. What did they announce yesterday?
ORR: The merged proposal contains a lot of DeMaio's ideas, although not all. It eliminates pensions for all employees except police officers, although DeMaio told me after this news conference that if this charter is adopted, the mayor and the City Council could vote to eliminate those pensions if they want to. But pensionable pay for the five years after this measure were enacted if voters approve it. And at yesterday's news conference, DeMaio was very happy, he called it a great day for San Diego.
(Audio Recording Played).
And this is it a good deal, because it provides San Diegans with comprehensive pension reform not only for new employees but for existing employees alike.
MAUREEN CAVANAUGH: So in the original proposal from the mayor and councilman Falconer, all public safety employees were excluded from moving -- from a guaranteed pension to a 401K plan, and remind everybody that this is for new hires.
MAUREEN CAVANAUGH: In this proposal that we have now, this compromise proposal, only police officers are excluded. What's the rationale for that change?
ORR: Well, I asked the mayor during the news conference, he said it was a difficult decision, he himself was the police chief for many, many years, so he certainly knows what the public safety life is like. But he said when he looked at it as a business decision, the -- it didn't make sense to keep firefighters on a pension because they don't have the same recruitment and retention issues that they have with firefighters as they do with police officers, so they felt they were safe in moving them over to a 4141, that it wouldn't heard the department that much.
THE COURT: No, you know that councilman DeMaio began by saying this is a great day for San Diego. And one of the reasons the check check for them is because they want to put this out as a ballot measure, and now they've only got one ballot measure to put on the ballot.
ORR: Right. And conservative groups in the city did not want to see two measure on the ballot. The Lincoln club and the San Diego tax payers' association were the mediators between council men Kevin Faulconer and mayor Sanders, and councilman DeMaio, because those two sides issue not a whole lot of harmony between them. So these two organizations were the mediators, the go betweens in hammering out this deal. They did not want to see two proposals because as April Boling with the San Diego tax payers association told me, if people see two such similar proposals on the ballot, it might confuse them, and they'd be likely to vote no on both of them. Having just one bell on the measure, means that the groups that support it can focus all of thirds requirement time and money on one proposal, instead of fracturing the group and dividing it up between two. So from their perspective it is better to have one stonger unified proposal than two separate proposals.
MAUREEN CAVANAUGH: Well, we've heard from the supporters of this idea. What are the cities' unions saying about this proposal?
ORR: Oh, they they are not happy. Not happy at all. And I think it could have the potential to be a pretty nasty fight, I think. You know, the unions say that they have sacrificed a lot already. And indeed a lot of the pension benefits that people criticize union member for receiving have been scrapped in recent years issue they're not getting those pensions anymore. The blew collar union will tell you that the pensions their workers are receiving are $25,000. $31,000. And they will tell you that -- they will remind you that the city is not currently enrolled in Social Security. So they don't get that backup of the so. They like they've already taken pay cuts, they've conceded on pay, they're facing the possibility of having their positions outsourced if managed competition goes through, so they just feel like they're taking it from all sides, and Joe Raymond is head of the city's blue collar union, she says this is really just a political student bi(politicians, self of whom are considered mayoral possibilities for 2012.
(Audio Recording Played).
We've already reformed the pension, the mayor came out request a model plan in 2009. Now he's saying he has this model plan of. I just don't believe a word that they say. And now you see Carl DeMaio and the mayor together, two weeks ago they were at each other's throats so who do you believe?
ORR: And Raymond is talking about the pension reform, the two-tiered system, that was already implemented. There is a voluntary 401K level for employees who want to take part in that, and the city received a lot of positive attention for that. And so the unions believe we've reformed the pension, and we should work -- focus on making that work instead of taking this, what they consider to be a more drastic step.
MAUREEN CAVANAUGH: You said something very interesting just a while ago, Katie, and that is that if indeed this ballot measure is approved, that perhaps the City Council can in some future time decide to fiddle around with the police officers' pensions. Now, why can't they just do that all at once? Can the City Council if they wanted to just enact this kind of city pension reform without voters? Without putting it on the ballot.
ORR: Well, a lot of the ballot measure involves changes to the city charter, and they can't do that without voter approval. Taking away the right of the unions to block labor contracts, they don't like -- is part of the city charter as well. So they have to amend the charter so that they can go forward with these proposals that they would like to see enacted.
MAUREEN CAVANAUGH: So what are the next steps in this process.
ORR: Well, the supporters of in initiative have six months to collect more than 94000 signatures to get the initiative on the June 2012 ballot, I'm sure we will be seeing more of this in the months to come, signature gatherers spreading out around the city trying to get this off the ground. And it will be interesting to see how the unions respond to this. You know, maybe they'll wait to see if it indeed does qualify for the ballot. Maybe they'll launch a campaign against it right now. Some people are wondering what the police officers association will do, the police union will do. Because they do not lose their pensions under this, but there might be a threat of them doing that. So will they stand with the firefighters and the life guards and the other city unions to oppose this measure?
MAUREEN CAVANAUGH: Very interesting. Thank you, Katie.
ORR: Thank you.
MAUREEN CAVANAUGH: I've been speaking with KPBS metro reporter Katie Orr. If you would like to comment, please go on-line, KPBS.org/These Days.