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I’m talking about “the real thing.” THE Cola. The single largest piece of the pension deficit: the “Cost of Living Adjustment.” And guess what, the mayor and council have decided to leave this bomb in the city’s financial future. Go figure.

Here’s a fact I bet you don’t know. Back in 2004, the Pension System’s actuary quietly revealed there was one way to immediately cut the pension deficit in half – get rid of the 2 percent annual COLA.

Yep, that’s right. Eliminate the COLA and presto – the deficit drops by $610,000,000! And, the funded ratio would jump over 14 percent!

In all the who-ha about the “remediations,” you heard much about that suggestion? Nope? Well it’s not because they haven’t thought about it.

You know there are ballot initiatives coming intended to really “clamp down” on the financial ooze.

One of these Charter changes is supposed to prevent increases in pension benefits without a vote of the people. They’re selling this as something like, “absolutely no more pension increases without voter approval.” Sounds good.

Just one teeny little thing you need to know.

There’s an exception (oh my) for “COLA’s,” the most giant element of the black hole.

It’s been “negotiated out” of the initiative. Well, of course it has. This is San Diego and we haven’t changed just ’cause the Krolls came to town.

Here’s a few problems on this COLA exemption thing:

  • San Diego has a “cumulative” COLA element. This pretty much guarantees that the city has to pay an additional 2 percent COLA every year on pension benefits. So, even without any new “benefit increases,” retiree pension benefits go up 20 percent every 10 years because of COLA. (Dick Vortman noted in his PRC report that many private pension systems have no COLA provision.)
  • And – you’ll love this – there’s more than just one COLA. There is a regular COLA calculated per the Bureau of Labor Statistics factors. But, there’s also “Star COLA,” supplemental COLA’s, a bunch of COLA’s. None of the COLA’s would be limited, or even governed by, the Charter proposal. They’re all exempt.
  • COLA is not even defined in the proposal so what’s to keep your buddies in City Hall from calling a bunch on new benefits “COLA’s?” Nothing. And you don’t get to vote on that!
  • Who calculates the city’s annual obligations for the COLA’s? Your pals at the Pension Board.
  • And finally, the “who pays for COLA’s?” As an exempt item, the split of how much taxpayers will pay versus what employees must pay can be changed by the council at any time.

Of all the benefit entitlements you’re not worried about and want to exempt from further negotiations, are you sure that list includes COLA’s?

You start taking these big items off the table of the “negotiations,” you might as well pack it in.

PAT SHEA

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