Does Prop B’s Pension Reform Save San Diego Money?
Tuesday, May 8, 2012
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Pension Reform Analysis
City Clerk's fiscal analysis of pension reform initiative.
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Special Feature Election 2012 Voter Guide
Special Feature KPBS Election Coverage
Proponents of Proposition B, the comprehensive pension reform ballot measure, say the initiative will save the city of San Diego close to $1 billion.
But some disagree.
Michael Zucchet, general manager of the San Diego Municipal Employees Association, which opposes the measure, spoke to KPBS. He said an analysis by the city's Independent Budget Analyst, or IBA, found the measure's savings do not come from pension reform.
Instead, they're found in a freeze on pensionable salaries between 2012 and 2019. That freeze would be the default position of the City Council, and changes to it would require a two-thirds vote of the council.
"What the IBA determined unequivocally is that everything in this initiative taken together, with the exception of the salary issue, costs taxpayers money," he said. "The new 401(k) costs money. You're basically cutting off your nose to spite your face for pension reform because it costs you money.
"The only thing that could save money, and could is the correct word, and that's the word I believe the IBA did use, not confirmed, but could, is if you freeze pensionable pay for the next five years - as employees have already done essentially for the last seven years, I might add - there are savings. But this initiative doesn't do it, it's the future actions of the City Council that would do it."
But Lani Lutar, president and CEO of the San Diego County Taxpayers Association, which supports the measure, said there are several parts of the measure that save money. She said the measure's rule that all new city hires will receive 401(k)s instead of pensions may mean the city pays more money at first, but it will result in long term savings.
"It accelerates the payments, so it's like paying your credit card debt down a little faster," she said. "That doesn't actually result in any new costs, you're just paying your debt down faster. And in fact, again, without Proposition B over a 10-year period, pension costs would increase by $100 million.
"I think Michael and the labor unions would like to have us believe that you shouldn't support this, even though there are so many aspects of Proposition B that we know will result in guaranteed savings."
Zucchet said because the measure doesn't save money, it's "basically a political maneuver for people to try and do things that have already been accomplished in the city of San Diego in the way of reform."
Those include new benefits structures for new hires, savings on "all kinds of programs" and a balanced budget, he said.
Lutar said there are several components to the measure in addition to the pensionable salary freeze that would result in savings. Those include an end to pension spiking and preventing convicted felons from receiving pensions.
She added that no other groups have proposed measures to reform city pensions.
"There is no reasonable alternative that has been put out there by anyone," she said.
Proposition B will be on the June 5 ballot.
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