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Statement: The city has given “no pay raises for our employees for the last three years,” Mayor Jerry Sanders said at an April 14 press conference.

Determination: Misleading

Analysis: The city plans to pay $231.2 million for employee pensions next year, about $26.5 million less than previously estimated by its retirement system. At a press conference two weeks ago about his proposed budget, Sanders described the drop:

Fortunately, due in part to gains on Wall Street and no pay raises for our employees for the last three years, our annual required contribution to the pension system is projected to be less than what’s expected.

But some city employees have gotten pay raises. All paychecks to city employees are not the same as they were three years ago.

In March, amid discussions about how to close a $56.7 million budget gap, Sanders gave $46,000 in pay raises to two city department directors. A spokeswoman said at the time that the directors got more money since they had taken on additional responsibilities.

Some labor contracts have also allowed city workers to get more pay by elevating to higher salary ranges after working for a certain number of years. Next year’s budget, for example, would shift 125 police officers from a low salary range to a mid salary range, boosting their annual pay between $4,000 and $17,000. These step increases, as they’re formally called, would contribute to a larger payroll next year under Sanders’ proposed budget.

So what was Sanders talking about?

Labor contracts often include annual across-the-board pay raises for all city employees. The city hasn’t granted those increases recently — as his statement correctly noted — though the retirement system still includes the boost in pension cost projections. Because the city hasn’t provided pay increases and has made wage cuts elsewhere, the city’s pension costs are lower than previous estimates.

The improvements on Wall Street that Sanders mentioned have also helped lower the city’s pension costs. When the stock market tanks, the retirement system’s investments take a hit and the city must pay a bigger chunk of the pension costs. But when the stock market improves, the retirement system’s investments boost the fund and the city pays less.

The mayor and others have cited the uncertainty of those fluctuations as a reason to replace pensions with a 401(k)-style plan for all employees except police. With a 401(k), employees would bear the investment risk, not the city.

Our definition for Misleading says the statement must take an element of truth and badly distort it or exaggerate it, giving the statement a deceptive impression. Sanders’ statement fits that definition because the city has halted across-the-board pay raises but contrary to the statement’s impression, continues to provide some employees with additional pay through other means.

If you disagree with our determination or analysis, please express your thoughts in the comments section of this blog post. Explain your reasoning.

Please contact Keegan Kyle directly at keegan.kyle@voiceofsandiego.org or 619.550.5668 and follow him on Twitter: twitter.com/keegankyle.

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