Statement: “Retirement costs are projected to consume one-third of Los Angeles’s budget by 2015, and half of San Diego’s budget by 2025,” Tad Friend, a reporter for The New Yorker magazine, wrote in a Sept. 5, 2011 article.
Analysis: An article in The New Yorker magazine this month detailed the poisonous pension politics in Costa Mesa, an Orange County community where a city worker committed suicide after receiving a layoff notice in March.
The reporter, Tad Friend, referenced San Diego when discussing rising pension costs across California:
“Retirement costs are projected to consume one-third of Los Angeles’s budget by 2015, and half of San Diego’s budget by 2025,” Friend wrote.
San Diego’s pension costs are high. But not that high.
San Diego’s retirement system estimates the citywide pension payment in 2025 will be $468 million. The city’s current budget is $2.8 billion. The pension payment in 2025 would make up 17 percent of the budget.
What if you just count the city’s day-to-day operating budget, which pays for fire, police and other general city services? The answer is higher, but still not close to half the budget. The pension payment would only be 32 percent of today’s $1.1 billion day-to-day budget.
And even if you add the cost of providing health care to retirees, the city’s other major legacy payment, it still doesn’t bump the figures anywhere close to 50 percent.
All these calculations are rough estimates at best. They assume the city’s budget doesn’t grow by inflation between now and 2025. Any budget growth would lessen the pension payment’s impact.
“Under no circumstance, based upon current projections, would the [pension payment] ever come close to 50% of the budget,” city Chief Operating Officer Jay Goldstone told us in an email.
We contacted Friend with our statistics. He told us The New Yorker relied on a 2010 report on city finances from the San Diego County Civil Grand Jury. The Los Angeles Times has cited the grand jury report, too, Friend said in an email.
The grand jury, a group of ordinary county residents that looks at government agencies each year, also was wrong. Its report said the city’s pension payment in 2025 would make up half the day-to-day operating budget. But the grand jury made a skewed comparison.
It compared a pension payment that covers all city departments, including water and sewer workers, with a budget that doesn’t pay for those services. The result exaggerated the pension payment’s impact.
Told The New Yorker’s source, Goldstone criticized the grand jury for doing a “sloppy job.” He previously lambasted the same report, which a Bloomberg columnist cited, in a letter to the city’s investors.
Because San Diego’s retirement costs aren’t projected to make up half the city’s budget in 2025, we’re rating the claim false. We’ll add a false rating for the grand jury, too.
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Liam Dillon is a news reporter for voiceofsandiego.org. He covers San Diego City Hall, the 2012 mayor’s race and big building projects. What should he write about next?
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