San Diego Will Take A $40 Million Hit On Pension Costs
San Diego will have to fork over at least an additional $40 million to cover its pension costs next fiscal year. The San Diego City Employees Retirement System reports investment returns that fell well below projections account for a little more than $8 million of that. About $27 million is associated with the cost of implementing Proposition B, the voter-approved measure that switches most new city employees to a 401(k) retirement plan.
Council President Todd Gloria said the news was expected and that he tried to prepare people for it.
"As a vocal opponent of Prop B, I tried to make clear to voters that this would happen if this was approved," he said. "It was approved and we will deal with it."
Proposition B is expected to cost San Diego money for the next six years, then the costs are expected to drop. Councilman Kevin Faulconer, a co-author of the measure, said it represents the will of the voters.
“San Diego voters overwhelmingly approved Proposition B to end the broken pension system and usher in an affordable and fair government employee retirement plan,” he said in a statement. “The facts are clear. Comprehensive pension reform will save taxpayers nearly $1 billion.”
The city's required pension contribution next year is $275 million. Gloria said the size of the payment may lead to more cuts to city services.