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San Diego Auditor Says Prop. B Might Not Save Money

Aired 5/18/12 on KPBS News.

San Diego's Auditor says it's not clear if Proposition B, the proposed pension reform measure on the June ballot, will save San Diego money.

— San Diego City Auditor Eduardo Luna refused to sign off on a city financial analysis of Proposition B earlier this year. The measure would switch most new city hires from a pension to a 401(k) retirement system. It also seeks to enact a five-year pay freeze for current employees.

Luna said that pay freeze, combined with previous salary freezes, could result in San Diego paying below-market wages. He said, ultimately there is just too much uncertainty to know whether the measure will save money.

"We didn’t consider the potential costs for a post-pay freeze, including the possible need to increase non-pensionable compensation," he said. "There may be high employee turnover, reduced morale, maybe potential negative effects on overall productivity."

Luna said potential litigation costs need to be accounted for as well. And he believed there were some questionable assumptions made in the city’s financial analysis.

That report found potential savings from the pay freeze to be more than $960 million over 30 years. Luna said he thinks it's hard to be so precise on the ultimate numbers because there are so many unknowns associated with the measure.

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