The following is from San Diego City Council President Pro Tem Kevin Faulconer:
Faulconer on KUSI discussing 401(k) ballot measure
Hello: Mayor Jerry Sanders and I announced the details of our groundbreaking pension reform ballot measure today at a news conference. I sincerely hope you will join us in support of these very important and necessary changes. Below are my remarks from the news conference. Please let me know what you think. Thank you……Kevin
- This is tough. This is necessary. This is groundbreaking.
- This is a comprehensive measure that puts San Diego at the forefront of pension reform.
- If a 401(k) is good enough for most workers across the country, it is good enough for City employees.
- This measure ends the pension system as we know it.
- It would:
- Cap city payroll for five years
- This cap, combined with the additional reforms in our ballot measure, would save the City $1.6 billion over the next 29 years.
- Cap public safety pensions at 80 percent of their salaries, based on the average of their three highest consecutive years.
- The current cap is 90 percent; all other major cities in California, such as Los Angeles, San Jose, Anaheim, Sacramento, and San Francisco are capped at 90 or higher.
- With this reform, San Diego instantly becomes a pension reform leader.
- Eliminate Charter Section 143.1
- The significance of this change cannot be overstated.
- As it stands, 143.1 gives employees the right to vote on any attempt by the City to roll back retirement benefits.
- The current employee vote on DROP shows how 143.1 stands in the way of reform.
Savings
- As I mentioned, this measure would save more than $1.5 billion. We paid Buck Consultants, Inc. to provide all our cost savings and actuarial valuations.
- The savings in the first five years – when the City will need the money the most – will total over $141 million.
- This plan saves money from day one, including $8.3 million in Fiscal Year 2013.
Public Safety
- There has been a lot talk about including all employees in a 401(k)-style plan.
- Let me be clear: a 401(k) plan cannot provide adequate death and disability benefits for police officers, fire fighters, lifeguards – people who put their life on the line for us every day.
- If you are willing to take a bullet, rush into a burning building, or dive into dangerous waters, you deserve a benefit that credits your courage.
- I want to ensure that San Diego is able to continue to recruit and retain the most qualified police officers, fire fighters, and lifeguards.
- If San Diego is the only city in the state not to offer a pension we will become a training ground for public safety employees, who will leave after we invest in training them.
- Of the ten thousand City employees, less than a third are sworn public safety personnel.
Pensionable Pay:
- The Mayor and I considered capping pensionable pay, which means freezing employee compensation.
- We decided to get a legal opinion to tell us whether or not we can freeze employee compensation for multiple years with a ballot measure.
- That opinion – by attorney Nate Kawolski of Atkinson, Andelson, Loya, Ruud and Romo – says:
- A multiyear wage freeze imposed on City employees at the ballot box is at odds with the state collective bargaining law: the Meyers Milias Brown Act, also known as MMBA.
- The MMBA gives labor unions the right to negotiate wages on a yearly basis with their employers, in this case the City.
- Since MMBA is a state law, the City Charter can not trump it.
- However, placing a cap on the City’s payroll expenses is legally defensible because it gives employees the right to negotiate.
- This is why a payroll cap is the best way to freeze City spending at the ballot box.
- The Mayor and I are not going to ask City voters to approve a ballot measure that won’t work. Period.
- It will be thrown out of court by a judge and put us back at square one – after subjecting the city to millions in legal bills and years of court battles.
- That is an irresponsible course of action.
- That is why we are putting forward a thoughtful and responsible measure that legally addresses our City’s problems.
Next Steps
- The Mayor and I have raised about $100,000.
- We need to raise much more and collect a total of approximately 94,000 signatures.
- We plan to be in the field collecting those signatures soon and at the ballot box in June 2012.
- It sounds like a lot – and it is – but I am certain that we will succeed. I have no doubt that San Diegans will support our efforts and ultimately approve this ballot measure…the language of which is being finalized and should be released in the next few weeks.
Conclusion
- The short and long term benefits of this measure cannot be overstated.
- We are not only ending the pension system as we know it, we also are generating immediate savings that we will use for police, fire, road repair and other essential city services.
- This measure clearly puts San Diego on the right path.
- Cap city payroll for five years