Auditor: Pension Initiative Overstates Savings

Auditor: Pension Initiative Overstates Savings

Photo by Sam Hodgson

City Auditor Eduardo Luna

 

Two months ago, the city of San Diego released its official financial analysis on Proposition B, the June pension initiative. The analysis said the city would net $950 million in savings over three decades if it passes.

But City Auditor Eduardo Luna disputed the figure. In a response to a draft of the analysis, Luna contended the savings estimate was exaggerated:

The draft fiscal impact analysis does not clearly and impartially present the relevant fiscal impacts associated with this ballot measure. In fact, the manner of presentation would, in our opinion, lead the average voter to conclude that a “Yes” vote on the ballot measure would reasonably yield the significant savings presented in the fiscal analysis when, in fact this is not necessarily the case.

Luna’s concerns spring from the measure’s key money saving element: a five-year pensionable pay freeze. We’ve spilt a lot of digital and visual ink on the pay freeze over the past year. In a nutshell the measure aims to hold steady city workers’ pensionable salaries over the next five years to save on pension costs. But voters can’t mandate city employee salaries at the ballot box so the measure provides a strong recommendation for City Council to impose the freeze.

The pensionable pay freeze is so essential to the initiative’s savings that with it supporters can claim the measure saves $1 billion over 30 years and without it opponents can claim it saves $0.

Because the freeze isn’t guaranteed, Luna didn’t think the financial analysis should count any of its potential savings:

By including an estimated savings of $963 million associated with a salary freeze that is based on problematic assumptions, the City materially biases the nature of the fiscal impact associated with passing the ballot measure. This is the case especially since additional City Council action subsequent to the ballot measure’s passage is necessary to trigger any savings.

He recommended that the analysis say the freeze resulted in “an undeterminable fiscal impact.”

The auditor, whose report was released March 14, also believed the analysis should mention the high risk of litigation associated with the initiative. Labor unions have vowed to challenge the pension measure, and one lawsuit already is winding its way through court.

Luna’s opinion lost the day. The city requires the auditor, independent budget analyst and chief operating officer to write the financial analysis for ballot measures. Budget analyst Andrea Tevlin and COO Jay Goldstone agreed that savings associated with the pensionable pay freeze should be included.

Liam Dillon is a news reporter for Voice of San Diego. He covers San Diego City Hall, the 2012 mayor’s race and big building projects. What should he write about next?

Please contact him directly at liam.dillon@voiceofsandiego.org or 619.550.5663.

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Liam Dillon

Liam Dillon

Liam Dillon is senior reporter and assistant editor for Voice of San Diego. He leads VOSD’s investigations and writes about how regular people interact with local government. What should he write about next? Please contact him directly at liam.dillon@voiceofsandiego.org or 619.550.5663.

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4 comments
Don Wood
Don Wood subscriber

Give Luna points for political courage and honesty. Sanders and DeMaio will be gunning for him.

Don Wood
Don Wood

Give Luna points for political courage and honesty. Sanders and DeMaio will be gunning for him.

Nick Hodnett
Nick Hodnett subscriber

Readers, please dig a little deeper. Talk to those on the inside and then formulate your own opinions. Current employees are not the problem and have been cast as such unfairly. Leadership making all the money, receiving the very pensions they are trying to eradicate for the rest. UNJUSTICE!!!

Nick_316
Nick_316

Readers, please dig a little deeper. Talk to those on the inside and then formulate your own opinions. Current employees are not the problem and have been cast as such unfairly. Leadership making all the money, receiving the very pensions they are trying to eradicate for the rest. UNJUSTICE!!!