Fact Check: Alvarez's Pension Reform Plan

Statement: “I’ve also worked with my colleagues to say yes together. Making sure that we have things like the five-year labor agreement, which by the way was something I presented even before Proposition B as a way to save millions of dollars for our city,” mayoral candidate and Councilman David Alvarez said at a Sept. 20 debate.

Determination: Mostly True

Analysis: City Councilman David Alvarez has less than three years in elected office under his belt so he’s trying to emphasize his big ideas and accomplishments during that relatively short time as he campaigns for mayor.

One of the ideas he’s repeatedly mentioned is his push for five-year labor deals long before former Mayor Bob Filner inked those cost-saving agreements with the city’s unions earlier this year.

At a debate last week, Alvarez claimed he championed the unprecedented labor deals before voters approved Proposition B, a pension reform initiative that drew its most significant savings from five-year pensionable pay freezes for city employees.

Alvarez made a similar comment in a recent U-T San Diego Q-and-A.

“Being able to reach consensus on some very difficult issues — retiree health care, a labor agreement this year, which, by the way, I proposed in January of the year before. That’s what I was proposing, a five-year (pensionable) pay freeze on employees to achieve those savings,” he told the U-T.

Alvarez’s statements merit some vetting because pension reform and the path to five-year labor deals will likely come up throughout the campaign. It’s crucial voters have a clear idea of the role Alvarez, a Democrat with an endorsement from the region’s most powerful labor group, played in process.

Years after San Diego earned its “Enron by the Sea” moniker, city Republicans and business leaders struggled to agree on the best approach to reform. In 2011, they united behind a single measure known as Prop. B, which aimed to save $963 million over 30 years by freezing the portion of city workers’ salaries that factors into their pension payouts. The initiative also called for the city to switch to 401(k) plans for most new city workers, a move projected to cost $13 million over 30 years.

Supporters later gathered more than 115,000 signatures and by late January 2012, the City Council voted to place the initiative on the ballot that June.

Months earlier, then-mayoral candidate Filner floated a pension plan of his own. It included a roughly $125,000 cap on annual pension payouts, a new formula for paying the city’s annual pension bill and unspecified concessions from city staffers that didn’t include 401(k) plans.

Then-City Council President Tony Young said he’d be open to a City Council vote on a competing pension reform measure but Filner’s proposal never materialized.

So days after the City Council voted to put the Republicans’ plan on the ballot, Alvarez emerged with his own policy. It was almost identical to Prop. B with major exceptions: It nixed 401(k) plans and instead capped annual pension payouts at $99,999 for new hires.

In a memo outlining his proposal, Alvarez argued his plan was superior to Prop. B. After all, he wrote, it would allow the city to reap the savings associated with pension reform without the costs.

“My proposed ‘Cap & Freeze’ pension reform measure … will achieve significant savings without the millions of dollars it will cost the city to implement a new 401(k) style retirement plan,” Alvarez wrote.

Like the Republicans, Alvarez relied on a five-year pensionable pay freeze to deliver those savings.

Both plans raised legal questions, in part because state law bars the city from implementing such a freeze without negotiating with its unions so the savings associated with either measure would require long-term deals with city employees.

But Alvarez’s plan never made it to City Council because Young, a fellow Democrat, refused to allow a City Council vote on Alvarez’s measure.

“This is a pretty important issue, and putting something on the ballot in three weeks without being fully vetted would be a problem,” Young told 10 News at the time.

Voters later approved Prop. B, the measure promoted by city Republicans.

Almost exactly a year later, Alvarez and other city leaders celebrated the unanimous approval of six five-year labor deals that would allow the city to reap the budget savings the initiative sought.

Now Alvarez, the mayoral candidate, claims he touted the idea long before those deals were signed.

That’s accurate. Alvarez did propose another pension reform initiative that relied on five-year labor agreements to accomplish its savings.

But there’s a crucial nuance missing in Alvarez’s statement: He officially proposed his plan 10 months after Republicans coalesced behind a measure that would later become Prop. B and, in fact, his version was almost an exact replica of that proposal. Only Alvarez’s sections on 401(k) and the pension cap varied.

There’s no evidence Alvarez would have proposed five-year labor agreements without pensionable pay increases if Prop. B hadn’t provided a roadmap for reform. Alvarez’s claims don’t acknowledge that fact so his statement is mostly true.

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