SAN DIEGO (CNS) - A ballot initiative to overhaul the city's debt-ridden pension system would save $950 million over the next 30 years, according to a fiscal analysis released Monday.
The initiative, which will appear on the June 5 ballot as Proposition B, would give most new employees 401(k) retirement plans instead of enrolling them in the pension system. The exception would be new police officers, who would still receive pensions.
The measure would also freeze for five years the amount of compensation that employees could use later to calculate their pensions, and limit it to base pay, not bonuses.
Proposition B is backed by Mayor Jerry Sanders, Councilman Carl DeMaio and the San Diego County Taxpayers Association, who have projected savings of at least $1.2 million by lowering the amount the city needs to contribute to retirement payouts. They say the annual growth of the city's contribution is taking up money that would otherwise by used for basic city services.
The fiscal analysis, put together by the city's auditor, independent budget analyst and mayor's office, found that the freeze on pension-calculation salary would result in savings of $963 million over 30 years. However, the change to a 401(k) program would cost the city $13 million, for a total savings of $950 million.
If adjusted for inflation, the net savings would be $525 million, according to the analysis. It also stated that since the ballot language allows the city to negotiate pay increases with workers instead of freezing pay, the savings could be reduced further or eliminated.
Proposition B is strongly opposed by the leaders of the city's employee unions, who object to exposing their members' retirement prospects to the risks of the financial markets, compared to the relative safety of the pension system.
They have long argued that the only savings would come from the pay freeze.
Lani Lutar, executive director of the taxpayers group that supports the initiative, said the analysis confirmed nearly $1 billion in savings without taking all the cost-cutting provisions into account, so the savings could be even higher.
An analysis was also released on Proposition A, which would prevent the city from making a contractor participate in a Project Labor Agreement for projects worth more than $25,000, unless required by state or federal law.
It was uncertain whether state funding for city projects would be put at risk, according to the analysis.
The main expense for the city could be in a provision requiring that the text of all contracts over $25,000 be posted. The analysis said that would cost $500,000 to set up initially, and $450,000 in annual expenses.
Supporters of the proposition say PLAs raise the costs of projects and make it difficult for non-union shops to make bids. Opponents claim there is no evidence of higher expenses.