Pension Reform Now!

My memo below will be discussed, next Wednesday, July 28 at 2pm at the Rules Committee which includes Mayor Reed, Vice-Mayor Judy Chirco, Councilmember Nancy Pyle and Councilmember Pete Constant. This is a public meeting.

Recommendation
Direct City Attorney to prepare legally binding ballot language for a ballot measure to be considered at the August 3, 2010 Council meeting for the November 2010 election allowing residents of San Jose to vote on changing the City charter by removing charter language regarding “minimum benefit” and “contributions/ cost sharing” in regards to pensions (Sections 1504 and 1505). Removing this language would allow the flexibility to negotiate a 2nd Tier pension for new employees whose hiring date is after January 1, 2011. This proposal would not change current legally vested benefits for existing employees. 

Background:
Public pensions costs are soaring and forcing our City to reduce essential services to residents. In fiscal year (2009-2010) the cost of pensions was $138 million. In fiscal year 2010-2011 the amount jumped to $200 million. (The $62 million increase is double the citywide Library budget).  In fiscal year 2011-2012 that number will grow to $240-250 million ( $240-250 million is approximately the annual Police budget) and could balloon to $350 million by 2015-2016 ($350 million is double the citywide Fire Department budget or more than the annual property tax and sales tax revenues)

The average private sector employer match is 3% for a 401K in the USA. In comparison, the City of San Jose as an employer matches at an 8 to 3 ratio or 250%.  Individuals with retirement plans like a 401k, IRA and SEP IRA bear 100% of the investment risk.  However San Jose employees do not have this risk and are guaranteed a net return of approximately 8% which means the gross return must hit 9%.  The average combined return on the retirement funds for the last 10 years has only been 4.4% thus the taxpayer makes up the difference; this fiscal year alone it was $52 million.  Therefore, since the taxpayers are responsible for paying the difference in pensions, I believe that residents should have the right to vote on whether or not they want to continue to pay sums such as $52 million in a single fiscal year.

It is imperative that the 2nd Tier pension be put on the 2010 ballot for the following reasons:

1). The City should give voters the opportunity to vote on the pension system.  To not allow the voters the chance to vote on this issue is undemocratic.  Some may say that we should just handle this “in house” and create a committee to look into alternatives and/or have closed meetings with the unions to try and negotiate an agreement.  Closed door meetings would not be transparent and we do not know how many years it will take to negotiate or if a consensus of any kind can be reached by a committee or negotiations. Additionally, any recommendation that may come out of negotiations or a recommendation by a committee would need to be voted on in a citywide election anyway.  We need to take advantage of the November 2010 election to know whether or not the residents of San Jose support a 2nd Tier retirement system for NEW employees.  Delay will result in missing out on the numerous “Baby Boomer” retirements that will take place and be filled by new employees.

2). A 2nd Tier provides flexible options.  The 2nd Tier may have a 1 to 1 match instead of 8-3 or it may have a 1 to 2 instead of 8-3 or it may be simply a new system like a 401K with a generous match from taxpayers of some reasonable percentage.  Actuarial studies must be completed and presented prior to making a final decision.  Retirement contributions from new employees and the city shall be put in an escrow account until a new 2nd Tier pension plan has been selected.

3). Reforming the pension system now will allow the city to balance the structural budget deficit and over time hire additional police officers, extend libraries hours and pave more roads in San Jose. If this is not addressed the rapid growth of the pensions will force our city to make additional cuts to essential city services or layoff more employees. Delay of pension reform may force our City into bankruptcy and raise taxes significantly. Even with higher taxes the new revenue is unlikely to keep pace with pension growth. This proposal maintains the benefits for retired and existing employees.

If the City Charter is not changed to allow the option for 2nd Tier system, the City will face continued severe financial duress.The current pension system is absolutely unsustainable and threatens the quality of life for San Joseans.  Let the voters vote!

70 Comments

  1. Pierlugi,

    A great start to be sure.  But why not also change the pension rules for employees who have not retired?  That happens all the time in private enterprise. 

    Upon expiration of union contracts, SJ has no obligation to continue paying the same matching percentages and guaranteeing the same ridiculous yields to current employees.

    Leave this part out and we’ll have budget-breaking obligations to existing employees for the next 30 years.

  2. Pierluigi,
    For those of us who could see this situation developing many years ago, what you’re now proposing seems like the commonest of common sense.
    Good on ya!

    • Pierluigi’s suggestion is a most welcomed one.  However, more is needed.  I and others believe we need to end binding arbitration for safety officers.  If you don’t like the working conditions, you can go elsewhere to work.  Let’s face it; unionized workplaces are in financial trouble; whether it be a public or private sector organization.  Unions destroyed the steel and auto industries.  They are now helping to bankrupt government entities as well.

      Public employees used to be considered our “servants”; they are now our masters.

        • Against the right to strike.  If these workers don’t like the job; they should be able to quit; take another job and take a defined CONTRIBUTION pension plan with them.

  3. Sounds like a great start.  And like Greg noted above, change the rules for those who haven’t retired also.  These benefits are completely detached from reality.

    If a vote gets put on the ballot about re-working the retirement system for current employees, will they be allowed to vote?  I didn’t get to vote on my 401(k) match (or lack of) this year.

    • Joe – if the employee in question is a resident of the City of San Jose, then they will be eligible to vote along with the rest of the residents.

      If they do not live in SJ, and they are displeased by the turnout of the vote, then the employee in question can vote with his/her feet, and try to find a similar gig in another city or county.

  4. Yet the city council recently found $50 million dollars to buy land for a baseball stadium. Kind of like having your house in forclosure and deciding to install a pool.

    Isn’t Pete Constant the one who is collecting a lifetime pension from the city after just a few years on the police department?

    • Even worse, Pete Constant is collecting a DISABILITY retirement from SJPD… did anyone see the picture of him wrestling in the merc!!  Isn’t that disability fraud??  How can he retire on disability with a bad back and still wrestle??  what a bunch of crap!

  5. And while you are at it, why don’t you direct the city manager to include language for a ballot measure to make the city council a part time position with half the pay. Unless of course you believe you are worth more and are better than other city workers? Come on P.O. put your money where your mouth is. I for one believe you will avoid this particular issue and continue to suckle at the breasts of the tax payers spending your time demoralizing others while stuffing your pockets and double dipping. If I were to argue for a full time council, then it should be your only job!

    • interesting to me that the council members make less than many city employees yet work far more hours.  same with their staffers.  a council aide’s pay is pitiful, and it’s guaranteed to be at least 50 hours a week.

      Public servant, I’m sure that you do an excellent job,  but I am also sure that you’re compensated at a private sector level with this gold plated retirement plan.  Enough already.

  6. PLO – I have to echo John Galt, and state Good on Ya for attempting to bring this pension situation back under some measure of fiscal sanity.

  7. Valid ideas.  Please don’t forget that some public safety employees do not earn social security benefits.  So while your comparison of a 401k to public pension is interesting, it is not a completely accurate picture.  Please don’t forget this during your considerations and your vote.

    • It’s odd that so many public employees and their employers don’t pay into social security.  I never understood why. 

      But, for the great majority of them, socking away 6.25% – what would be their share under SS – would amount to far more than the average SS recipient can ever hope to collect.

  8. Mr. Oliverio,

    Again you attempt to thrust the financial woes on the backs of those who work for the city and yet you still back such silly tax payer funded projects that waste those same dollars?? How in gods name are you still in office? Do you read the papers at all? Do you see the Pandoras box that has been opened up in Oakland?

    Good luck attracting young, qualified officers to a police/fire department that won’t compensate for 30 years of taking out the trash so you can sleep peaceably at night. You obviously have zero grasp on the duties of those employed in these positions!

    Let’s start with cutting your staff, your pay, the pet projects, the stadium proposals, the art projects, the crossing guards, and the library hours, the cash support for ex-mayors projects, etc, etc..!

    Your self-centered radicalistic way of divvying up the tax payers money to form a utopia where no unions exist, and the employee is at the whim of the city council is frankly un-American. Get a clue. Your ideals will only lower compensation, thus attract lower quality of employees, and the city will suffer more in the long term.

    Oh, but I forgot, you’ll get your stadiums with some fancy artwork out front….

    • Your argument is that, unless we pay gold plated pensions, we can’t attract 20 year olds?

      Hogwash.  Pension costs are one of the key factors keeping salaries low for rookies.  Besides, fire departments especially have no trouble at all attracting recruits.  Typically there are over a hundred qualified applicants for every position.

      • HA! If you think that somehow the pensions given after 30 years of dealing with fights, shootings, being spit on, etc.. is “gold plated”, you need your head examined! Sure those that serve chose these positions, but I don’t see YOU getting beat on or spit at from the comfort of your cubicle!! Pension costs have nothing to do with keeping salaried low..show me a job where you make top step pay right out of college??

        Look at the statistics, just because 100 APPLY for a position, it certainly doesn’t mean that they are qualified to do the job. Over 3000 apply for police positions when they open up, and generally the last several police academies have graduated less than 40 officers each time. Any crook or idiot can apply for a job….

        San Jose prides itself of the quality of the applicants it chooses to employ, which is why you can walk your doggie at night and not be shot at like in Oakland. Benefits and good pay are necessary to attract and retain quality employees in this day and age. That is, unless you are willing to settle for lower quality and poorer service. Im not!

        Keep the compensation, get rid of the crossing guards cut the libraries now!!!!

        • John Q- utter nonsense.  sure lets get rid of the libraries, and crossing guards so our kids can get hit by cars,  and so that lower income families have no where to go for computers or reference books.  just plain stupid.

    • look at the numbers.  you guys are bankrupting us and disrupting other key services of the City.  the guaranteed return rate is obscene and not sustainable.  I live on $32K a year retirement,  would love to have a guaranteed 6 figure retirement income—

      by the way I served in the military and put my life on the line for 5 years.  I got below poverty level wages the entire time.

  9. Has P.O. become a republican?  Sounds like a tea party member.  Maybe Rush L. and P.O. can join hands in a common adventure.  I for one have felt that to ease the pressure off the pension system is to lower the amount of employees.  I think that is currently going on.  The Police Department will be at 1200 officers.  160 officers off the city pay roll.  I think that equals about 40 million dollars in savings.  That figure is only counting the cost of the employee.  Not the cost of training, vehicles and equipment.  I would also suggest the department needs to cut it’s supervisor staff by 50%.  They have more brass than a opera. This would also be a cost cutting idea. The current tizzy going on is the Deputy Chief wants members not to put their boots atop lockers.

  10. Pierluigi, I’m officially proud to have you as my representative.

    To all the city workers: you have been quietly overcompensated for years and it has taken this terrible recession to bring it to light. 8 to 3 matching and a guaranteed net return on your retirement is absolutely ridiculous.  Snipe all you want at other city expenditures.  The fact remains that your benefits are unsustainable and must be changed to normal levels.

  11. The culture of city employees must change, their obsession with money.

    Only when the last tree has died and the last river has been poisoned and the last fish been caught will we realize we cannot eat money.

    No matter how hard you hug your money, it never hugs back.

    Dear city employees, please remember, the journey is the reward.

  12. Councilman Oliverio—“The average combined return on the retirement funds for the last 10 years has only been 4.4% thus the taxpayer makes up the difference…”

    Nice stat, Councilman. I used your same formula and figured out that for the last ten years the average combined race of the first lady has been 80% white. Perhaps you’d like to try selling that load of crap, along with a mirror, to Michelle Obama?

    The truth of the matter is that, during the ten year period cited, city leaders (not some anonymous arbitrator) substantially increased the salary and retirement benefits of its public safety employees in response to market forces (scarcity of applicants, competition from other agencies) and the political whoring of our insatiable elected officials (Ron Gonzales hiked his skirt up the highest). In facilitating these fiscal obligations, not to mention the pricey and ridiculous Taj Gonzal, our city leaders closed their eyes to both the volatility of a bubble-bursting market and their duty to the future taxpayers of this city.

    Had this city’s leadership not prostituted itself in lockstep with then-governor Gray Davis, the police/fire pension system might never have dipped below its traditional 100% plus funding level, and the taxpayers never tasked with paying for the mistakes of its negligent and selfish leaders.

    Councilman Oliverio—“Reforming the pension system now will allow the city to balance the structural budget deficit…”

    The idea that changing the pension system, itself the creation of the elected and appointed officials heretofore referred to as “the city,” would suddenly enable “the city” to govern responsibly, is reminiscent of the foolish notion that removing Saddam would allow the fractious Iraqi tribes to bring good government to their country. This city has never, ever demonstrated the inclination or ability to spend within its means, save during the years of plenty, or stick to a pay as you go policy.

    During those years when, because of a booming market, the city was substantially relieved of its obligation to the pension fund, those suddenly un-obligated dollars were treated like manna from heaven, disappearing into the black hole of quid pro quo politics.

    Greg Howe—“But why not also change the pension rules for employees who have not retired?”

    Change the rules in the middle of the game? The men and women who signed on and agreed to take all the insult, injury, and death this city’s bottom-dwellers could give them, in exchange for a defined level of financial security, you would, decades later, renege on the deal? Running a little low on integrity, are you? Or is your real interest in draining SJPD of the professionalism and integrity upon which our safety depends? Do you really want our police department to become as untrustworthy and corrupt as our council or daily newspaper?

  13. 10-7-ODD,

    Guess you never read all the documents associated with your benefits.  Nowhere… I repeat, nowhere did it ever say that the mechanics of the pension plan were carved in stone.  You must still believe in the Tooth Fairy if you think that pension plans are locked in for life on the first day of one’s employment. 

    There never was a “deal” decades ago, therefore there can be no taking away in the present.  It has nothing to do with integrity; it has everything to do with your feeble understanding and your jumping to conclusions regarding some fantasy land pension that never did exist.

    • Just a bit of constructive criticism. Take it for what it is worth. Try toning down the your insults of opinions which are written counter to your opinions.

      While there are strong feelings on both sides of this issue, there is no reason for you to say 10-7od has a “feeble understanding”. You may not agree with him, but he/she is very articulate. Belittling someone’s intelligence you disagree with really detracts from any valid points you have.

      • Between 10-70D’s last paragraph and Greg’s comment, I believe the former was much more insulting.

        People have their pay packages and retirement benefits changed all the time, why should government employees be exempt?

        The promises made are ridiculous.  A 250% match with a guaranteed 8% return and good job security…geez, reminds of a bridge I heard was for sale.

    • Not carved in stone? Is that the best you can do to try to justify your otherwise indefensible suggestion that we should pull the rug out from under our cops and firefighters—after having tricked them into signing on and serving decades protecting us?

      Since you have such a superior understanding of the pension system perhaps you can find a single job posting from years past that did not feature—prominently!—the pension benefits due upon completion of the specified term of service. Young people job-shopping compare those things, you know—they’re influenced, attracted, often swayed by them.

      That bait-and-switch mentality of yours may be considered admirable in whatever racket you’re in, but I’d be careful spouting it off around the cop shop or firehouse… or you might wind-up with a handful of offerings for the tooth fairy.

      • 10-7-ODD,

        Ya’ just don’t get it.  I find it near impossible to argue with one who has so little comprehension of the situation.  Job postings are NOT contracts.  Benefits cited in job postings are simply forecasts at that point in time – again, not contracts.  Binding contracts are only cast when unions and agencies negotiate and sign them periodically.

        But please feel free to continue calling me names and issuing insults and threats – it can only weaken your already empty arguments in the eyes of rational readers.  As for me, I’ll no longer field your replies.

    • As I recall, much of the city employees’ pension rights are in the city charter, not in a collective bargaining agreement.  What I don’t know is whether those charter provisions were enacted by the council or the people.  Does anyone here have that answer?

      I thought I read that Mayor Reed wants this put to a vote of the people.

  14. Pierluigi Oliverio, thank you for addressing the taxpayer’s concerns about the city’s dyer budget. The city’s budget appears to be getting increasingly difficult to balance and the coffers are drying up. However, I would disagree that a two tier system should be implemented and voted on by the taxpayers. Voters/taxpayers elected you to represent us and to make decisions on our behalf. By placing this on the ballot, it means that you will be spending taxpayers’ dollars to get the message out in hopes that the voters favor your proposal. By placing these critical decisions onto the voters/taxpayers you’re taking away your role as an elected official and spending taxpayers’ dollars in advertisement in support of your ballot measure. If this is how you like to operate as a city council member it makes me call into question our need for you to be a city council member. In addition, San Jose would be the first city to go to a two tier system within the county. So, what are other cities doing to maintain the ability to balance their budgets and competitively pay their employees without using a two tier system? Maybe our city council should turn to those cities in the county and come up with alternative solutions while competitively paying our city employees and continuing to provide outstanding services to the taxpayers. Do not forget that this city is still one of the safest cities in America and that is a result of its employees.
    Thank you,
    An influential resident within your district.

  15. It seems like the prevailing argument for keeping the current pay structure is that the jobs are so dangerous that you cannot get qualified applicants.  I assume that the proposal includes all city employees, not just the fire and police departments, although I suspect that those two departments account for the bulk of the budget.  My guess is that the private sector has a similar mix of jobs with some being more dangerous than others.  And the public sector, like the private sector, should depend on the free market to determine what pay is required to attract qualified applicants.  My suspicion is that it won’t take an 8/3 subsidized pension with a guaranteed return to do this.

    Also, it seems disingenuous to try to deflect the discussion to Council pay or other issues when it is clear (at least to me) that the biggest problem is that salaries and pensions are getting totally out of control and clearly this cannot continue.  It is a systemic problem and discussing how we got to this out of control situation is not particularly productive and seems more of an attempt to obfuscate the problem than shed light on it.

    Thanks, Pierluigi for tackling this very sticky problem.

  16. “In comparison, the City of San Jose as an employer matches at an 8 to 3 ratio or 250%.”

    I am a CalPERS member, not SJ city.  With curren 3-2 matching.  But there were time when our plan was “superfunded” according to CalPERS, so there were no matching, it was 0-1 for a long period of time.  And depends on when you pick the time-frame, it’s pretty close to 1-1 over a whole career.(We are on local-misc, not safety.)

    What’s the average city matching, smoothed over a city employee’s career?  That’s much more informative than just cherry-pick current number.

  17. It seems a popular argument for reducing the “unsustainable” public pensions is to adopt retirement options commonly used by the private sector.  Routinely we see arguments stating that those in the privae sector do not have the guaranteed retirements that public employees enjoy, and this would be accurate.  However, would it then not be fair to shower upon public employees the same fantastic benefits that so many of the private sector employees enjoyed during the boom years?  How about those Friday beer busts courtesy of the City?  How about stock options that result in early retirements far sooner than most other citizens?  How about company cars, free trips abroad, catered meetings, and all the other perks that so many in private industry reveled in during the fat times?

    Certainly this would be a fair trade off.  If the public is going to hold their municipal employees to the same standards as private industry, these same employees should reap the benefits when the pendulum swings back the other way right?  Or is it really more accurate that those whining about public employee benefits would continue to do so no matter what the circumstances.

    • Where have you been for the past 10 years?

      Comparing public employee benefits of today to those private sector employees enjoyed during “boom years” of the Clinton era is quite disingenuous.

      The private sector excesses you mentioned went away with the recession, as should city worker’s gold plated benefits. In both cases they are economically unsustainable.

    • “Many” of us in the private sector didn’t come close to enjoying the “fantastic benefits” listed above during boom years. Many folks were and still are simply trying to eke out a living.

  18. Today in the merk there is an article about child porn internet crimes. I don’t think many people realize what a technical job public safety is these days. Who are you going to hire and retain by slashing wages and benifits. It seems you need degrees in computer science, chemistry, law, and biology just to get the job done in police work and fire service these days.

    If the citizens of San Jose want to pay minimum wages and benifits, then they should be prepared for the amount of professionalism and service that goes with it. P.O. hasn’t thought of all the damage this policy would cause to our city. In the end it is much cheaper to keep our city safe from crime, fire, natural and human disasters by having highly trained and professional police and fire departments. To have these; you must have the best, brightest and physically able men and women in these positions.

    What are their pay and benifits worth to us keep our families and nieghborhoods safe from child predators, fire, identity thieves, accidents, gangsters, disasters, and criminals?

    • sjdowntowner70 gives the same old tired arguments about how we have to pay for professional city workers, especially police and fire fighters.  Well, we need equally talented people in the military who do intelligence work, search and kill bad guys; and they do it all for less money.  Survey after survey shows these civil servants are overpaid by private sector standards for comparable work.  Fire fighting work is about #7 in the top 10 most dangerous jobs.  Police work doesn’t even make the top 10.  Most of the top 10 jobs are private sector jobs, by the way.  I bet that pay and benefits are major considerations for people who choose to do police and fire fighting work.  Also, these people are paid extra money over a city pencil pusher in order to compensate the dangerous work police and fire fighters do over that of a pencil pusher.  So, why should they get 90% (police) or 85% (fire fighter) of final year’s earnings (which in itself is outrageous) at retirement when the pencil pusher only gets 65% after comparable years of service?

      Also, if the city had a law comparable to the AZ law we would have fewer illegals here in the city.  That means fewer social services, less crime and fewer gang members.

      As for more crime if we don’t pay these people these generous compensation packages, yes, perhaps crime will increase.  If that happens residents will vote with their feet and move elsewhere.  When that happens, where the city get the money to pay these generous salaries and pensions?

  19. Promised pensions benefits for public-sector employees represent a massive overhang that threatens the financial future of many cities and states.

    “Most public employees, if they hang around to retirement, can count on pensions equal to 75% to 90% of their pay in their highest-earning years. And many public employees earn even more in retirement than their best year’s base compensation as a result of “spiking” their last year’s income by working ferocious amounts of overtime and rolling in years of unused sick and vacation days into their final-year pay computation.”

    ” MAKING THE STATE AND local pension problem all the more trying is that government entities can do little to wriggle out of their exposure, even if spending on essential services is threatened.

    The constitutions of nine states, including beleaguered California and Illinois, guarantee public-pension payments.

    And most other states have strong statutory or case-law protections for these obligations.

    “One shouldn’t be surprised by this, since state legislators, state and local judges and the state attorneys general are beneficiaries of the self-same public pension funds that they’ve done so much to promote and protect,” Orin Kramer notes wryly.

    True, a dozen or so states, including New York, Nevada, Nebraska, Rhode Island and New Jersey, are attempting reforms such as raising retirement ages, cutting pension-benefit formulas, boosting employee contributions, curbing income “spiking” and partially switching employees to less costly defined-contribution plans. But these changes affect almost exclusively new employees and do little to solve the existing funding gap.”

    “A spokesman for Lockyer told Barron’s that the treasurer “realizes that the pension-underfunding problem is serious, unsustainable and therefore needs to be fixed. He wants to ensure that any reform is fair to all stakeholders, including the state, public employees and taxpayers.”

    No one, of course, would dispute that public servants deserve adequate retirements, particularly the 25% to 30% that lack Social Security coverage. But the old saw that rich retirement packages are a necessary inducement to attract good employees to public payrolls because of below-average pay scales no longer is true.

    According to the latest compensation survey by the Bureau of Labor Statistics, the average state and local employee out earns his counterpart in the private economy with an hourly wage of $26.11, versus $19.41.

    That’s before benefits (pensions, health care, paid vacations and sick days and leaves) drive the disparity even higher, to $39.60 an hour for public employees and $27.42 for private workers.

    Even if one looks at pay received by so-called management and professional employees in each realm, fat benefits in the public sector drive the total compensation received by state and local managers to almost dead-even with private-sector managers—$48.15 versus $48.17. “

    http://online.barrons.com/article/SB126843815871861303.html#articleTabs_panel_article=1

  20. Lets clear up some possible pension cost and who pays what misunderstandings

    Cops and firefighters got:

    1) 90% for 30 years after prison guards and highway patrol lobbied Grey Davis and Legislature to increased pensions in 1999

    2) they got retroactive 90% for all the prior years not what they thought they were going to get what is commonly called “windfall pension benefits”

    A 30 year officer in 2009 was under old pension for first 20 years until 1999 and new 90% for 10 years but because of retro active got 90% for all 30 years and city had to make up all prior to 1999 pensions costs to 90% public safety and 75 % for other city employees

    3) 8% pension earnings guarantee increased city contributions to 90% and reduced employee contributions to 10% pension costs

    City paid 8 dollars and employee 3 dollars for about 50% of pension contributions of 4.5%

    8% earning guarantee city pays 8 dollars for first 4.5% and city pays 100% or 11 dollars for second 4.5% = 19 dollars vs employee 3 dollars or about 90% of pension costs

  21. Steven Greenhut talked about his book Plunder!: How Public Employee Unions Are Raiding Treasuries, Controlling Our Lives and Bankrupting the Nation (The Forum Press; November 23, 2009).

    He took a critical look at government workers and the unions that represent them. Mr. Greenhut argued that government employees, who receive salaries, benefits, and a level of job security that far outpace workers in the private sector, have become a huge drain on state and federal coffers.

    He responded to questions from members of the audience.

    http://www.c-spanvideo.org/program/290950-1#

  22. Another government agency in (dire) need of pension reform: our own Valley Transportation Authority.  See my posting under “Rants and Raves Returns” for the dirt and what YOU can do about it.

  23. As you know, I’m with you all the way on this pension reform item. I’m also very much in favor of the City Of San Jose in filing for BANKRUPTCY! Then we can start over with all these contracts! Whether the residents of San Jose realizE it or NOT, the CITY is BANKRUPT!

  24. How many of you are willing to give up the Social Security check of the system you have paid into your entire working career?

    As a police officer who worked for 20 years in the private sector and paid into social security, my check from social security will be cut in half because I will get a 50% pension from a police department when I retire at age 63 because I started late in this profession. Where is the fairness in that? Why is my social security being drastically penalized because I will hopefully make it to collect a pension from a police department?

    Most officers have worked other jobs in the private sectore, sometimes for many years, before becoming an officer. These same officers have paid thousands of their own dollars into the social security system yet will never collect a dime from this system.

    I don’t mind giving up some of my retirement if everyone in the private sector agrees to take a cut in their social security checks. After all, social security is going broke.

    • You don’t pay social security taxes as long as you’re an officer.  Of course you get less from social security when you retire.  That’s entirely fair.

      I would love to have the option to stop paying social security taxes and reduce payments when I retire.

      • Don’t really want get into this again, but I am talking about retirement at the age when you would normally get the highest ss benefit, not collecting early at age 63.

  25. If I worked for 20 years in the private sector, and another person worked 20 years in the private sector, and if we paid the exact same amount into social security, how is it fair that I will get 50% less of a social security check than the other person, everything else being equal, because I happen to get a police pension? Dianne Feinstein, for several years, has tried to fix this inequity which I doubt will ever happen.

    And also as an officer, we do pay taxes into the medicare part of social security system, so it is inaccurate to say we don’t pay into the ss system.

    Do you think we should do away with the social security system?

    • You said it yourself: “just because I happen to get a police pension.”  You do realize most private companies are ending their pension plans, right?

      And yes, I do think we should do away with the social security system.  But that’s a different topic.

      I’ll give you this: if we voters succeed in taking away your gold-plated pensions and officers start contributing to social security, I’ll support you getting your full social security payments.

      • “officers start contributing to social security”…I did and do contribute to social security. I also have a small business and pay about 16% into social security, yet I am not going to get the same benefits you are. I also do not consider 50% pension at age 63 for 21 years of service a “gold plated pension”, especially now that I am paying over 20% of my gross income into our own retirement system.

        • 1. You don’t contribute to social security from your police officer paycheck.
          2. You’re getting 8 to 3 matching and a guaranteed net return on your contributions.  If you can’t plan a comfortable retirement based on that regardless of how much you eventually get from social security then you need to study up personal finance.
          3. 50% pension is infinitely better than zero pension, which is what I’ll get.

        • Not to turn this into a lovefest, but I admire your civil tone throughout this discussion.  I know I can have problems doing that, and it’s definitely rare on this forum.

          As for finding a job with a pension, it’s harder than you think.  I’m relatively new to the work force.  I was at Lockheed for some time, they ended their pension plan for new employees in 2005.  My dad retired from IBM with a pension, they also ended their pension plan for new employees.

          Look, I’m not saying you don’t deserve a pension because I don’t get one.  Here’s why we in the private sector are angry:
          1. Public employee retirement plans are hugely out of sync with the private sector. 
          2. This is not because the market requires these benefits to find and retain applicants, but because public employee unions have used their political might to place pawns in leadership positions and bully everyone else to get what they want.
          3. Our tax dollars that are funding these retirement plans.  As we watch our roads deteriorate and libraries cut hours, public unions are still getting disproportionate matching and a guaranteed return on their retirement investments.

          This is unsustainable.

        • I am very sorry you will not get a pension of any sort. My dad gets a pension from a bank he worked for for 35 years and although he has invested wisely, he would have a tough time making it without his pension and social security. I think many seniors would be in the same situation. It is pretty scary that companies are dropping pensions since they can outsource work to countries where workers are willing to work for 20% of what they make here and don’t have to pay any medical insurance or pensions. Sounds like that is the boat you are in.
          Maybe you should consider a job change with a pension. I admire you for sticking to your guns and saying you don’t want to pay into social security either.

        • I appreciate your points and civility. I have great concern for our senior citizens like my dad and your dad who rely on their pensions as well as social security. Many seniors could not make it without their pensions and I don’t know how many people have the financial savvy to invest on their own over a lifetime to reach a point where they would be financially independent in retirement. Prior to becoming a police officer I worked long enough in another private industry to qualify for a small pension at age 65. I just got a letter that the pension fund is in serious danger of running out of money. I can’t imagine what would happen to all the seniors if their pensions were suddenly cut. I am no economist but how does our future generation and our children looking for jobs here in this country compete with China, India etc when their workers work for 20% of what workers here make and on top of it have no medical insurance, pensions and few labor laws? Thanks again for the thoughtful dialogue.

  26. The tone of this conversation is quite clear. It is pure socailism. These elitists are spewing their song on how the salaries of how one profession do not match that of another, and that public servants should be indentured servants. The hate and jealousy of these activists are imeasureable.

    California and the Bay Area specifically is an expensive place to live. Comparing salaries and benefits from outside the area is not fair. I know a few people who work for city, state and federal agencies. They are hardworking folks, supporting their families and doing their jobs without adequate resources. I am fearful that those in the fire and police depts. will feel these cuts not just in their salaries but in injuries and deaths.

    This is more than just about cutting costs. It is about cutting the fabric of our society based upon justice, law and order. These activists dont see anything good in public safety or public service. They want to disassemble our system and way of life so they can grow and smoke their drugs without inteference. Wake up and really look at the motivations, look at the undertones of the language, it’s not hard to see.

    • Sanchez sayeth:

      > I am fearful that those in the fire and police depts. will feel these cuts not just in their salaries but in injuries and deaths.

      Maybe we use some of the savings realized from closing the government employee gravy spigot to provide anti-fear counseling for fearful people like Sanchez.

    • This is perhaps the most confused post I have ever seen on these forums, and that’s saying something.  I’ve never seen an attack on public unions twisted to be an attempt by liberals to get us closer to socialism.

      This is not about equal distribution of wealth.  It’s the fact that the disproportionate benefits public employees enjoy is due to their unions’ abuse of the political system.  These benefits are out of sync with the what the market requires to attract and retain talent.  If you’re such a capitalist, this should make sense to you.

    • So, unless the government pays you far above market prices, we must all be commies? 

      Every job is about hardworking folks supporting their families.  Truck drivers, farmers, loggers, fishermen, construction workers, and miners all work hard, and they all have families to support.

      Why should police officers earn so much more than these other people, who also have families and who also are hard working? 

      Don’t tell me it’s because your job is dangerous.  Every one of the jobs I listed is more dangerous than police officer.

      And don’t tell me it’s because we need police.  We couldn’t eat without farmers and truck drivers, and we’d be homeless without builders, loggers, and miners.  We need them, too.

  27. Hi,
    I agree something needs to be changed on City pensions.
    But why are we only targeting public safety? What about the DA office? They get a “free” car etc

    What about UC? Uc is full of graft.

    I just do not understand why we are only targeting public safety. These guys are doing a dangerous job.

    Meanwhile, we have Chancellors giving their girlfriend/ etc partner $500k jobs

    why are we not examining the whole mess?

  28. The problem is bigger than SJ.  State legislators should actually be working on this.

    They should:
    1) Rewrite binding arbitration to allow splitting the difference rather than taking last best offer from one side or the other.
    2) Require pay as you go pensions (don’t differ contributions for increased benefits)

    With that said, we all know Sacramento is not going to doing anything to help.

    2nd Tier benefits for new hires will help in 20 years, but only provide incremental over the next 5.  I looked at a few cities that have already rolled it out and the savings are real modest.

    The greatest beneficiary is the individual and not the city for pensions.  The city benefits theoretically by workers staying longer to “vest” and “max” pension benefits. The individual benefits with lifetime wages and medical care far beyond what social security or other systems could match.  Make the person pay more of the cost for their benefit.  Phase in 50-50 pension contributions over 5-10 years, and require supplemental contributions for investment shortfalls or benefit increases.  Stop granting automatic COLA’s for retirees.  Average the three highest years for retirement base pay instead of the single highest (pay spiking for pension boosts).

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