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San Jose voters to consider pension reforms

(AP Photo/Marcio Jose Sanchez)

November 2, 2010 8:25:12 PM PDT
Two pension reform measures will be placed before San Jose voters in next month's general election.

Measure V would change the mandatory arbitration process for police and fire department employee disputes.

The measure would change the arbitration procedure in a number of ways, starting with factors considered by the arbitration board.

The measure would have the board determine which party's last offer is in the best interest of the public, considering factors such as the city's ability to pay the employees without reducing services, and how the salaries compare with those of other city employees.

Prominent supporters of Measure V include Mayor Chuck Reed, San Jose Silicon Valley Chamber of Commerce CEO Patricia Dando and Silicon Valley Taxpayers' Association president Douglas McNea.

They claim that the measure would rein in the power of outside arbitrators by preventing them from giving pay raises that exceed the average increase in designated revenues over the past five years, and from giving retroactive benefits or creating unfunded liabilities. They say the measure will help the city regain control of its budget and protect the taxpayers.

"It's the first step in a long process of pension reform," McNea said. "The pension plans we have now are obviously unsustainable. Police and firefighters seem to be dictating the terms to the taxpayers when it should be the other way around."

The measure is opposed by police and firefighters, who claim that its passage will put the safety of residents at risk.

They say the city's spending is out of control and has led to the layoff of 49 firefighters, the closure of five fire engine companies and the elimination of 80 police officer positions. They claim that Measure V will make it easier to lay off firefighters, police officers and close neighborhood fire stations.

Voters are also asked to consider Measure W, which would change the charter's retirement provisions for future employees.

The current charter requires the city to provide employees with a defined benefit retirement plan, an employer match of 250 percent, a retirement age of 55, and benefits for life based on final compensation.

The measure would exclude new employees from the current retirement plan and from current minimum requirement provisions in the charter and instead provide them with a new, actuarially sound plan.

Proponents of the measure, among them Reed and Councilmembers Rose Herrera and Pierluigi Oliverio, assert that the city's pension costs are unsustainable and that the measure would remove barriers to reform without taking away benefits from retirees and save the city millions of dollars.

The city spent $180 million for pensions this year, a $42 million increase over 2009, according to supporters. They say costs continue to rise and could reach a staggering $350 million a year by 2015, leaving little money for city services.

Tom Cochran, vice president at BancWest Investment Services, and Karl Hoffower, a former member of the San Jose Sunshine Reform Task Force, are among community leaders that oppose the measure.

They claim that while pension reform is necessary, Measure W does not guarantee cost savings, does not limit employee pensions or protect the city's general fund, but instead threatens funding for police, fire, library, and park services.

They say the measure is misleading because it does not contain limits on how much the city contributes to employee retirement costs and will burden taxpayers with unpredictable costs.

"There wasn't enough debate and discussion on what the measure is really going to be about," Hoffower said. "From my experience with the task force, unintended consequences come about from a rash decision when it comes to long-term public policy."

Both measures require majority approval.


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