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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.

The numbers are in and the city of San Diego is facing a significant jump in its pension payment next year.

Photo credit: SDCERS

A summary of San Diego's pension plan gains and losses over FY 2012.

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.

City News Service contributed to this report.

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