Yesterday, I answered four big questions about the Republican-led ballot measure on city worker pensions. Questions from readers about the proposal are rolling in, so I’ll try to answer three more of them here.
1. Will future elected officials and City Council and mayoral staffers receive 401(k)s instead of pensions if the ballot measure passes?
Yes. The 401(k) language explicitly includes city politicians and political staffers, City Councilman Carl DeMaio, one of the measure’s authors, said on Twitter yesterday in response to a question from me.
YES, electeds and poltiical (sic) staff ARE part of the reform measure: 401(k) plans! And we end the “subsidy” on elected officials
The “subsidy” DeMaio refers to is a perk that allows elected officials to pay less than half of their costs to the pension system, unlike other city employees. DeMaio was successful at making an issue out of it last fall.
2. But really, is this legal?
We’ll find out.
Ballot measure proponents have taken great pains to argue that their plan is legal. Much of the work done in weeks of negotiations prior to the initiative’s unveiling was to wordsmith the measure so it would pass legal muster.
Still, it’s a near certainty the measure will face a court challenge.
Here’s one potential flash point. The ballot measure would allow the city to exclude certain specialty pays, such as extra pay for speaking more than one language, from current employees’ pension calculations. Doing so would reduce the city’s pension debt without affecting employees’ take-home pay.
The provision is based on an idea DeMaio proposed as part of his financial recovery plan in November. Back then, opponents argued that the idea would violate a California Supreme Court decision that said specialty pays should be tied to an employees’ compensation when calculating their pensions.
Further, 10 years ago the city settled a lawsuit brought by retirees based on the same principles as the court case. The attorney who represented the retirees has said DeMaio’s plan won’t work. A pension expert I quoted yesterday raised similar concerns.
3. What about Social Security?
You might have heard that city of San Diego workers don’t participate in the Social Security system.
So would taking away their pensions mean they would have to go back?
The ballot measure isn’t clear on that point, laying out different rules for if the city reenters the system or remains outside of it. This issue is important because a 401(k)-plan combined with a Social Security benefit, might actually cost the city more than its reduced pension system for recent hires. Further, labor and other progressive leaders have argued that leaving workers without a pension or Social Security would take away employees’ retirement safety net.
We’re still looking at how this might work, but it’s likely that the federal government will need to be involved in signing off on the city’s plans. As it stands, it appears that the ballot measure caps the city’s contribution to all new employees’ retirements at 9.2 percent of their compensation, except for police officers.
Though their plan now has morphed with DeMaio’s, Mayor Jerry Sanders and Councilman Kevin Faulconer wanted to re-enroll the city in Social Security through the proposed ballot measure they released two weeks ago. At that press conference, I asked the mayor if the federal government had signed off. He told me it hadn’t, but was confident it wouldn’t be a problem.
“They have said that we can rejoin at any time that we want,” Sanders said.
With all the talk about Social Security today, KPBS metro reporter Katie Orr tweeted a story she did in December on the city’s history with Social Security.