SAN DIEGO (May 3, 2016) – Jerry Sanders, April Boling, and Lani Lutar released the following joint-statement today:
“June’s election could determine the fate of pension reform in San Diego. Four years ago, we campaigned for Proposition B – the Comprehensive Pension Reform initiative that 66 percent of San Diego voters supported.
“The measure is expected to save taxpayers $1 billion – money that would have gone to bloated pensions. San Diego can now invest those funds in road repairs, parks, libraries, more police officers and firefighters, and other critical services the City provides.
“But now that’s all at risk of being lost. Some union leaders are attacking the pension reform measure in the courts. If our elected officials do not defend pension reform, we could lose it all. We need City Councilmembers who will vigorously defend pension reform. Any weakness on the City Council could mean the reforms we worked so hard for, and voters supported overwhelmingly, could be watered down or eliminated.
“We encourage all San Diegans to ask candidates where they stand on pension reform and then vote for candidates who will resolutely defend it.”
Jerry Sanders is President & CEO of the San Diego Regional Chamber of Commerce. April Boling is former chair of the City’s Pension Reform Committee and one of the authors of Proposition B, Comprehensive Pension Reform. Lani Lutar is former President & CEO of the San Diego County Taxpayers Association.
###
Comments 9
“The measure is expected to save taxpayers $1 billion…”
Actually, it won’t and I challenge any of the actuaries that worked on this measure to state publicly that the City will contribute $1 billion less to to employee retirement funds than it would have otherwise had this measure not been enacted. In fact, the City is and will pay more based on the terms of the measure.
The above does not mean that Prop B was without merit. What Prop B did was give the City, and therefore the taxpayers, certainty of cost by shifting the risk of investment returns from the City to the individual employee. That fact is irrefutable and an honest argument in favor of Prop B. A $1 billion cost savings, on the other hand, is neither.
HQ, I presume you are saying that after 40 years when all the remaining “grandfathered” pensioners are retired and dying like flies, there will be no annual savings for the city in FUTURE pension costs. So we will never achieve $1 billion cumulative savings over the old pension plan. I presume you also assume that under the old contract, zero further inflation/merit increases of salaries, and no COL pension increases from this point forward would have occurred.
Interesting thesis.
Isn’t Lani Lutar the one who endorsed Poway’s disastrous billion-dollar Capital Appreciation Bond?
Richard,
Actually I did not assume any of that. Talk to an actuary. The defined contribution plan costs the City more today, will cost more tomorrow and will cost more in 40 years.
HQ,
What investment return assumptions are you using?
W.C.,
I am assuming whatever rate is being assumed by the fund’s actuary. I am not the one doing the math. I am simply telling you what the actuary who advised the Prop B campaign would tell you. The defined contribution plan that the City currently provides is more expensive.
These KPBS interviews addressed the issue of cost and savings. Note that the radio segment (left side column) is longer and goes into more details.
http://www.kpbs.org/news/2012/may/08/election-coverage-prop-b-city-pension-reform/
HQ, you “talked to an actuary”? THAT’s your purported proof??
FYI, most actuaries in this pension field make their living by lying about the numbers and suppositions. If they DON’T lie, they don’t get the government pension contracts.
Do you really think that the city’s obligation under the old pension plan would continue at 9% or less contribution per year? Are you DAFT??
No way 9% a year funds 90% pensions as early as age 50 (public safety). Not even close, especially with what little the police and firefighters were paying towards their Cadillac pensions prior to pension reform. 9% would not fund the nonsafety pensions either. Not with a realistic rate of return, and updated mortality tables. And let’s not consider unfunded pension spiking in all its many forms.
Richard,
Not any actuary, the actuary who advised the campaign.
As for your 9% (of wages) assumption, that was the City’s contribution. The employee also contributed.
Finally, you might want to read the IBA report that Lani Lutar was so kind to post.