All New City Employees Should Be Given Second-Tier Pensions

The city of San Jose should put a hold on hiring firefighters until the firefighter union accepts a lower cost, second-tier pension plan for new employees. This would achieve cost savings and keep the city on a fiscally responsible path. Doing so would allow us to dedicate more funds to hiring police officers.

My prior work experience before joining the City Council was in the high tech industry, so pensions and their financial obligations were new to me. However, given that the annual property tax revenues collected by the city were not sufficient to cover the annual pension payment, it was obvious that action needed to be taken. Nearly three years ago, I initiated a pension reform ballot measure that allowed the city to establish a lower cost, second-tier pension plan for new employees. Voters passed Measure W with more than 72 percent of the vote. The city was then able to negotiate a second-tier pension plan with 10 of the 11 city unions, including the police officer’s union. The firefighter’s union is the one exception.

The firefighter’s union set themselves apart from the other city employee unions and simply refused to negotiate a two-tier pension plan. In order for the city to sustain itself and provide day-to-day services to residents, a second-tier pension system for newly hired employees, including firefighters, is not only the financially responsible option, but it has become essential.

Every other city employee union has realized that the only way to keep the city viable, and the existing pension system intact, is to accept a second-tier pension plan for new hires. The firefighters have shown their objection to joining fellow city employees through their unwillingness to start arbitration on the issue. The city was forced to request that a judge compel the fire union to arbitration, and, on June 17, the court ordered the fire union to arbitration pursuant to the city charter. Even with the judge’s recent decision, final implementation of any changes could take approximately one year.

Filling any future vacancies with new hires on the first-tier pension plan is not only financially costly, but it is also unfair to the other city employees who have agreed to the two-tier system. Continuing to hire firefighters under the old single-tier system simply increases the unfunded pension liability that has plagued the city for years, and it impedes the city’s ability to meet its critical needs in the future, such as hiring additional police officers. Among all the proposed pension reforms, a second-tier pension plan for new employees has always had the strongest support from the public. The fire union should not be exempted.

I appreciate and respect the work of all San Jose firefighters, but I have found the fire union bosses to be obstructionist in their dealings with city officials. They have historically been unwilling to work towards the necessary solutions that are required, so that San Jose can have both adequate police and fire protection for residents.

Pierluigi Oliverio is a councilmember for San Jose’s District 6.

25 Comments

  1. PO,

    You, the council, the mayor and city manager have been obstructionist in your negotiations, refusing all offers except your own.  How is that negotiating?  Oh, it’s not.  You simply want us to accept your plan without any give and take that negotiations usually result in. 

    Why is it that the police chief, the fire chief and so many other department heads have left San Jose in the last year, along with countless other city employees?  Because your “negotiation” tactics and treatment of employees have made San Jose an undesirable place to to work.  As employees we need to take concessions, of course, but city management needs to make concessions too.

  2. So would a second type tier pension plan be implemented on any future city council personnel also?  I agree that a seconds tier for new employees would be okay because they would be aware of what they have coming.  What I don’t agree with is the Mayor and city council trying to screw over city employees from what they have negotiated.  City leaders should live by example, which I have not seen.  Soldiers won’t follow their leaders if they lie, cheat and steal!

  3. Being a City of San Jose employee, a former Firefighter and Paramedic, I believe firefighters from all Cities are overpaid. I know they save lives, etc…etc… but why do they feel they deserve 6 six figure salaries when other City employees make no where near that and have higher qualifications for their positions? (yes, I know the job is physically demanding, but why the six figure salaries that are well above the $100,000 figure? most or all do not even live in San Jose, they live is “higher end” communities)I have the highest respect for our Firefighters, but I have witnessed (from the inside) many times how they play politics to extort higher salaries/raises from their City Leaders. Their justification for the wonderful benefits package is “We save lives! without our raises/high salaries/retirement @ 50 w/ 90% the City would burn and everyone would die”. Why can they not make a little movement toward helping the City? say increase their retirement age to 55 w/ 85%? For every open Firefighter position, usually thousands of people apply. This has been the case for decades. Unlike the Police, reducing Fire Dept benefits will not stop thousands of people from applying for even one open position. Other City unions voted for the 2nd tier, why not SJFD? Lastly, why does the City have Firefighter/Paramedics? I worked for SCV Ambulance as a Paramedic back in the late 1980’s, back then SJFD would usually drive away when we showed up, if they stayed, they only had basic first aid training and were of limited help. No one was dying in the streets because SJFD did not have Firefighter/Paramedics. Private Ambulance Paramedics can do the job much cheaper. SJFD could save money if they ditched their FF/PM Program.

    • LoyalPublicServant,

      Things have changed quite a bit since the late 80’s.  Simply relying on a private ambulance company to provide all advanced life support would be foolish.  Just check the response times of Rural Metro right now.  The county has been on the verge of pulling Rural Metro’s contract for failure to comply.  Now, does response time matter on every call?  Absolutely not, but for about 5-10% of calls response time is everything.  We routinely wait for 15-20 minutes for an ambulance to arrive, not what you want when patients are critical. 

      Additionally, you ask “why can they not make a little movement toward helping the city?”  We have.  We gave up 5 engine companies and about 14% of our pay.  I’d be happy to take 85% retirement, but everything we offer is rebuffed by the city without serious consideration simply because they wanted to push for Measure B, which, has a great chance of failing in the courts.

      • Wow! I was not aware of these givebacks your union agreed too. yes, PLO, Mayor Greed, and their goons never even attempted to negotiate with the unions. Walking into a negotiating session, tossing the City’s proposal on the table saying to the unions take or leave it is not negotiation! As for ambulance response times, I remember when the private ambulance companies implemented System Status Management (SSM) in the mid-1990’s, coming from the “old EMS guard” in the 80’s I saw this for what it really was, a way to reduce their costs, why else would a private company implement something if it does not save them money?!? I did not know their response times were so bad. Thank you for enlightening me. On a more related note: I want to mention that PLO and other 18th floor folks mention that City employees took a 10% pay cut. Let me correct this…it was an 18% paycut! I checked my paychecks (10% paycut + 8% increase in monthly benefit contributions). To say it was 10% is a lie!

        • Cant speak for the fire union but I the POA offered to roll back the pension benefits for all employees to 3%@55, then offered an 85% pension benefit cap and then a 75% cap ALL OF WHICH WERE REJECTED BY THE CITY AT THE DIRECTION OF THE MAYOR AND COUNCIL INCLUDING THE AUTHOR PIERLUIGI OLIVERIO!

          None of this has ever been reported by any of the columnists who write for this “SJI” site, the METRO or THE MERC.  All the public gets from these CLOWNS WITH AN AGENDA is “public employees are greedy…. public employees are overpaid… public employees have bought and paid for elected gov’t officials…”

          So full of excrement I don’t know how they can stand the smell of themselves!!!

  4. Remember, Pier and other elected are not affected by Measures V, W or B… their PERS pension is unaffected by “reform”.  The author only needs one more term in order to get his payout, as he chose PERS instead of a 401k.

    Of course, they gave a token “try” by asking how much it would be to buy out of PERS… knowing full well it would be in the millions of dollars.  They still haven’t bought out, or even tried to implement a “second tier” for their future Council Members.

    Pier, in the Mercury News version of this opinion piece, took little time to belittle comments by former City staff who mentioned the decline of the Police Department by his Measures… but didn’t bother to explain what he is doing to mitigate it.  City workers are fleeing this place and Reed’s majority keeps fiddling.

    • correction…. Oliverio is NOW vested in his taxpayer funded CalPERS Retirement.  Employees in CalPERS plans vest after only 5 years of service (Oliverio is currently in his 6th year of city service). 

      Easy mistake to make since all City Employees who are contributing to their own pensions in any of the CIty Retirement Plans must work 10 (Ten) years before they are vested in their particular plan. 

      Never Forget, the folks at the top will always make sure that they have better pay and benefits than the people who actually do the work.

  5. Wow, Councilman Oliveuio is right. Do not hire another firemen till they give in to your demands. Pretty soon there will not be enough firemen on the trucks to keep them safe and they will have to give into you.  Just like the police department,  so what if they get hurt they signed up for it.  We can survive without the fire and police.  We need more simple minded followers like you,  if we all just do what Mr reed says we can get these guys to work for free. 

    Oh and those union bosses are they not firemen?  Sort of confused as you said you respect firemen. But then you bad mouth the firemen leaders?  The leaders that all the firemen voted for.  You do know these union bosses or thugs are firemen right?

  6. To PLO,

    Why not do away with the Fire Dept all together. Use Volunteer Firefighters. Yes, you will find plenty of people willing to volunteer. No more staffing problems. Money saved will solve the budget problems. Better idea, why not privatize the Fire Dept? have them all make minimum wage! heck, why not privatize the police as well, like the 19th Century Pinkteron’s hired by some corporations (remember Haymarket?). Just think of the money the City will save! I dare you, double dare you, to put this idea on the Council Agenda. If you do this I will buy you a cup of coffee at the wagon in the City Hall Lobby wink Yes, I still believe the Firefighters are way overpaid, but both Fire, Police, and other unions brought forth very reasonable proposals for reducing costs and the half-witted city “leadership” refused to even consider them. Please, I ask one question: Why?

  7. I am not a fireman nor do I work for the fire department.  I will tell you that the people who say fire personnel are overpaid are nuts.  You couldn’t pay me any amount of money to stand on top of a structure that is on fire and could possibly collaps.  Also when my father collapsed from a heart attack fire personnel were on scene in five minutes.  It wasn’t until four more minutes passed that ambulance personnel arrived.  So I for one say we need   fire medical personnel more the ever.  This isn’t the eightees we have a million people in this city and we have the staff of police and fire to suit a city of have our size.  I feel bad for public safety in this city.  The mayor and council should be in the in the same retirement plan as everyone else.

  8. Pier your arrogance knows no bounds . You constantly speak of things you know nothing about . Go ahead threaten to ” Not hire any more Firefighters until the Firefighters union accepts a lower cost , second tier pension plan for new hires” . This seems like it might fall under San Jose’s Harassment Policy , maybe under Retaliation or Quid Pro Quo , either way it is the perception of the harassed that counts and NOT what you mean. You are such a Politician( trust me , i mean it as an insult. but I dont want to be censored AGAIN) . you speak in half truths and distortions( just like your personal hero , REED) the truth is City workers presented a plan that would have saved the city upwards of $500million Dollars , Guaranteed !  Reed & Council refused to even consider it because …….well lets just say it wasn’t your plan or Reeds plan. so in other words , it could never work. You keep bringing up the other unions like they happily went along with your plan. They didnt , they had No choice , they were imposed upon! so dont make it seem like you are cozy wit city employees, nothing could be further from the truth .

      Honestly its getting really tired , you saying “I Appreciate and Respect Firefighters ” Its a crock , you know it and everybody else knows it! . Its funny that you call them Obstructionists when they have constantly been ready willing and able to negotiate . You dont want to negotiate , you want to impose. Well thats illegal and so is Measure B , come mid July You’ll See

  9. What advantage does the Mayor, Council, City Manager, and their toadies on the 18th floor get out of squeezing the employees? Is it political? Is it financial? Are the Koch Brothers secretly buying them off? Are they following a “hidden Tea Party-Libertarianesque” agenda? The employees know there is a budget shortfall and pension issues. We are the ones who would suffer if the city goes broke, not the mayor, not the council, and certainly not the city manager. Thus, we have a vested interest to work together with the city leadership to come up with a solution. The unions have done their part in putting forth reasonable proposals. But our dear leaders would rather take a sledgehammer to the problem and a our way or the highway approach.

  10. Let’s point out for a second that anyone who’s watched San Jose politics over the last I don’t know how many years, that, union-busting has become a bipartisan affair. Council member Pierluigi Oliverio and Mayor Chuck Reed, both Democrats, may not be taking on our local unions by trying to take away their collective bargaining rights, BUT this language of “a hiring freeze and second-tier pension plan” is still making unions take it on the chin. AND IN THE END – WE know these two will both be long gone when our city is trying to recover from their agenda.

  11. PO,
    You can continue to toot your own horn, suggesting your great pension reform ideas.  The truth of the matter is that you as Council Oliverio have failed. To name a few, the employees don’t trust you, the city is in the red, the Redevelopment Agency is billions in the red and more important than any of that is that you have put my family’s health and safety on the line. Is it by chance that we don’t have a chief of police and a chief of fire? Of course not.

    I located some recent power point presentations, and granted the presentation with slides alone raise many questions but the facts on responses times show the complete breakdown of the system. You councilman should be ashamed a these results.

    http://sanjoseca.gov/DocumentCenter/View/17215
    http://sanjoseca.gov/DocumentCenter/View/17216 ( see page 53)
    http://www.mercurynews.com/bay-area-news/ci_22444843/san-jose-fire-officials-detail-response-data-error

    • See page 23 of the second presentation as well.  Interesting to see the population vs staffing for all of Santa Clara County plus Palo Alto contrasted against San Jose.

  12. I’d like to see a calculation of true cost savings which takes into account the certainty that the vast majority of police officers hired under the second tier retirement system will only work a minimum period of time for the city before taking their talents and training elsewhere. San Jose officers are already paid less than all of their local counterparts and will now have the worst (by far) police retirement plan in the stae. There will be no reason for them to stay in San Jose for long. Other departments will recognize the cost savings associated with not having to pay to train these officers. The already alarming exodus of San Jose officers will only accelerate.

    I can’t believe that Reed, Oliverio and the rest are too stupid to realize that this will be the ultimate result of their efforts. To the contrary, I believe that this must be their plan. They apparently have no problem with a police department staffed with a disproportionate number of inexperienced officers. I believe that this is because they view officers as a fungible form of unskilled labor, and this is where they are making their critical failure in judgement.

    The ability to properly handle volatile situations and violent people is a skill that is honed through years of experience. An officer’s most vauable, day-to-day skill is the ability to use words to diffuse situations and extract critical information, which is also enhanced through experience. Reed, et. al., don’t get it, and San Jose residents will suffer for years as experience routinely flees the police department.

  13. Pier,

    In my opinion, this is just a form of extortion on your part. The firefighters are exercising their legal rights, and your proposal is a threat to their safety and livelihood for doing so. You are also apparently willing to jeopardize the safety of the citizens in the process.

  14. It is interesting to be inspired and saddened at the same time.  While I never imagined politics to be as important as they apparently are…I never expected to learn that some of the best people, such as PLO, to go into politics to fight for “us” would have to face such criticism!!!  First of all…PLO has a limited set of options, but aside from that..does anyone ever ask themselves why the city has to make such cutbacks?  My father not only served the government, but was also a fire fighter and a volunteer firefighter.  If all people paid their fair share of taxes, then we would not be at war with each other due to the effects of proposition 13.  It seems that the City of San Jose should be fighting to overturn old laws that are the real issue rather than fighting a local politician, who is truly on their side.  Local government is the way to make the best of the City of San Jose.