Statement: “The supporters are admitting that the short-term costs outweigh the savings even if the measure is found to be legal,” Evan McLaughlin, political director for the San Diego-Imperial Counties Labor Council, wrote in a June 30 press release.

Determination: False

Analysis: Next June, San Diego voters will likely be asked to approve an initiative that would replace guaranteed pensions with 401(k)s for most new city of San Diego employees, among other reforms.

Supporters of the measure have to deal with one problem: The switch will cost more money in the short-term at a time when the city is dealing with serious budget problems. That’s because the city will have to accelerate payments to the pension system to comply with government accounting rules for closing plans.

The measure’s opponents, including the San Diego-Imperial Counties Labor Council, have seized on that issue to criticize the initiative.

Last week, ballot measure supporters released a long-awaited financial analysis of the plan that includes the accelerated costs to the pension system. The analysis prompted Evan McLaughlin, the Labor Council’s political director, to fire off a press release saying: “The supporters are admitting that the short-term costs outweigh the savings even if the measure is found to be legal.”


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That’s not accurate.

Supporters concede the short-term cost of the 401(k) switch, which is the initiative’s centerpiece, but have included other proposals within the initiative that they say more than make up for the costs of closing the pension system.

For instance, a five-year freeze on employee pay creates enough savings in the initial years, backers estimate, to outweigh the 401(k)’s costs.

The analysis projects $2.3 million in overall savings in the first year and $189 million in the first five years.

McLaughlin called his statement a “poor choice of words,” but held to the idea that the measure will cost more in the short-term.

“We believe there will be short-term costs that are not being accurately reflected by the proponents at this time,” McLaughlin said.

For instance, he said, supporters are relying on the city’s retirement system to change its actuarial assumptions to account for the savings. If the retirement system’s board doesn’t make the change the city wouldn’t realize savings from the pay freeze until later.

Still, McLaughlin said “supporters are admitting” that short-term costs outweigh the savings in the measure. They aren’t. Because of that, we’re rating his statement False.

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

You can also e-mail new Fact Check suggestions to factcheck@voiceofsandiego.org. What claim should we explore next?

Please contact Liam Dillon directly at liam.dillon@voiceofsandiego.org or 619.550.5663 and follow him on Twitter: twitter.com/dillonliam.

Liam Dillon

Liam Dillon was formerly a senior reporter and assistant editor for Voice of San Diego. He led VOSD’s investigations and wrote about how regular people...

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