By the Numbers: $68 million
When city of San Jose officials sold pension reform to voters in 2012, taxpayers were told it would save $68 million a year. That claim has since come under scrutiny countless times.
The latest salvo came last week in a story by Al Jazeera America, which called the city's 2012-13 investment performance “atrocious” and argued that the city could've saved twice that amount in 2012 alone if it had reined in risky investments and performed as well as the Standard & Poor's 500.
San Jose's investment strategy of “shifting money from stocks and bonds to high-risk, low-transparency 'alternative investments' … may be a bigger factor in the financial crunch” than generous retirement benefits to employees, the news agency reported.
But Arn Andrews, the city's assistant director of finance, says that doesn't account for the bigger picture.
“That is not a comparison that makes any sense,” he told San Jose Inside. “I think it's really unfair to use only a year or two of return information to make a point on a program that is really looking 20 to 30 years in the future.”
Roberto Peña, the city’s director of retirement services, added that it's like saying an athlete's first two years on a team will determine the rest of his or her career.
Al Jazeera does note, however, that only one other public pension fund in the nation fared worse than San Jose's in 2013. The Indiana Public Retirement apparently underperformed the San Jose Federated City Employees' 8 percent return, the report states, adding that the stock market redoubled that year and the S&P returned more than 20 percent.
San Jose's Federated system returned -3.2 percent by the end of the 2012 fiscal year, the article states, while the national average for public funds sat around 1 percent.
"This was the worst of the statewide pension funds surveyed by Al Jazeera, and the worst of any public pension fund in California," the report declared. "The S&P 500, meanwhile, returned 5 percent during that same period."
Some dramatic restructuring of the retirement boards took place just before the two poor-performing years highlighted by Al Jazeera. A city-ordered audit in 2009 recommended replacing elected city officials from the two retirement boards with appointed "independent experts." The city complied a few years ago. Today, those boards are vying for full autonomy—to secede into an agency independent from the purview of the city manager.
Peña says his office will draft a response to the article this afternoon to circulate among employees, "to correct some mistakes and misinformation."