San Jose In Deep Pension Mess

September 30, 2010 - By admin

Steven Greenhut: Here’s the latest statement from the San Jose mayor regarding the city’s pension crisis. It’s good to see a big-city official championing this cause:

Statement from Mayor Reed on City Auditor’s Findings that San Jose’s Retirement Funds are $2 Billion Short

San Jose, Calif. – The City Auditor’s most recent report – “Pension Sustainability: Rising Pension Costs Threaten the City’s Ability to Maintain Service Levels – Alternatives for a Sustainable Future” – states that the City faces $5.4 billion in liabilities for guaranteed pension benefits for current employees and retirees and is $2 billion short in meeting those obligations.

Mayor Chuck Reed released the following statement:

The reality that we all must face is that our employee costs are unsustainable. Cities like San Jose are in the service business; as a result, employee costs are the largest part of our budget.

I believe San Jose has the best employees in the state. The impact of rising pension costs has meant that San Jose can’t hire more firefighters, police officers, librarians, gang intervention workers. As Mayor, I think our growing City needs to be providing more services, especially in these difficult economic times. The majority of our non-public safety unions stepped forward in June and shared the pain, giving up ten percent of total compensation and helping fund retirement payments.

We had to ask for that level of concession because of the growth in pension and employee costs. Over the last decade, San Jose’s general fund dollars have grown by 21%, while the average cost per employee has gone up by 87%. For public safety employees – firefighters and police officers – the increase is even more dramatic at 99%.

San Jose police and firefighters can retire at age 50, and the non-sworn employees can retire at 55.  In some instances, pension payments are greater than the salary employees received when they were working, with an annual 3% increase, lifetime health and dental insurance provided without annual payments, and a lump sum payment of hundreds of thousands of dollars for unused sick leave.

Our Charter requires us to provide city employees with a defined benefit retirement plan, a minimum employer match of over 250%, a retirement age of 55, and city guaranteed benefits for life based on final compensation.

Retirement costs have tripled over the last ten years. As a result, we have had to cut services to our residents and businesses year after year. These out-of-control costs are why we can’t keep all of our libraries, community centers, and swimming pools open. Many of these costs are the result of big pay and benefit increases awarded to our public safety unions by outside arbitrators. Sky-rocketing costs are also fueled by generous retirement benefits that are guaranteed in the City Charter.

The current system is unsustainable. Now is the time for the people of San Jose to get involved, work for fiscal reform, and ensure that funds go to the basic services we all need – like fixing potholes and protecting our neighborhoods.

The audit report is online at http://www.sanjoseca.gov/auditor/AuditReports/1010/1010.pdf. Sharon Winslow Erickson, the City Auditor, may be reached at (408) 535-1250.

SEPT. 30

Comments(0)
  1. DavidfromLosGatos says:

    Could be worse. Could be Los Angeles …

  2. impeach Mayor Reed says:

    Your a crook.. Sell more land to the A’s for half the cost…Take more money from the tax payers. Why won’t you put the city retirement into calpers??? Al the city council are in Calpers??? Mayor Reed, you must have known something to move your council to a safe fund?? Hmmm.. Oh, by the way your mother must have been proud?

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Joseph Perkins
Joseph Perkins, now assistant editor of the Orange County Register Opinion Pages, started his career as an editorial writer for the Wall Street Journal. After serving on the White House Staff of former Vice President Dan Quayle he wrote for the San Diego Union-Tribune where he authored a nationally-syndicated column. Before writing for CalWatchdog.com, Mr. Perkins was also Business Editor for San Diego Magazine.
Chris Reed
Chris Reed is a regular contributor to Cal Watchdog. Reed is an editorial writer for U-T San Diego. Before joining the U-T in July 2005, he was the opinion-page columns editor and wrote the featured weekly Unspin column for The Orange County Register. Reed was on the national board of the Association of Opinion Page Editors from 2003-2005. From 2000 to 2005, Reed made more than 100 appearances as a featured news analyst on Los Angeles-area National Public Radio affiliate KPCC-FM. From 1990 to 1998, Reed was an editor, metro columnist and film critic at the Inland Valley Daily Bulletin in Ontario. Reed has a political science degree from the University of Hawaii (Hilo campus), where he edited the student newspaper, the Vulcan News, his senior year. He is on Twitter: @chrisreed99.
Brian Calle
Brian Calle is Editor-in-Chief of CalWatchdog.com and the Opinion Editor for the Orange County Register. His work has appeared in Bloomberg, Fox News, Forbes, Real Clear Politics, Human Events, Real Clear Markets and City Journal, among other websites and publications. Find him on Twitter: @briancalle
John Seiler
John Seiler has been writing about California for 25 years. That includes 22 years as an editorial writer for the Orange County Register and two years for CalWatchDog.com, where he is managing editor. He attended the University of Michigan and graduated from Hillsdale College. He was a Russian linguist in U.S. Army military intelligence from 1978 to 1982. He was an editor and writer for Phillips Publishing Company from 1983 to 1986. He has written for Policy Review, Chronicles, LewRockwell.com, Flash Report and numerous other publications. His email: writejohnseiler@gmail.com

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