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San Diego Pension Reform Ballot Initiative — the biggest untold story of 2012

San Diego Pension Reform Ballot Initiative — the biggest untold story of 2012

Professor Jacobson made an exceedingly important point yesterday: Our focus must be on “changing what we can change, protecting what we can protect, undermining what we can undermine, acting locally.

Based on my experience in San Diego, I cannot stress enough the vital role that local activism is playing in fiscal reform.

Here is Exhibit A as proof of the success of can-do citizen activism: Proposition B – San Diego’s Pension Reform Initiative.

The measure, which passed in June 2012 with over 65% of the votes, put new city employees (except police) into a 401(k) style pension, rather than a defined benefits package.

This measure was spear-headed by Carl DeMaio, the former San Diego mayoral candidate and City Council member, who has now turned into a taxpayer watchdog by organizing two separate reform groups (one focused on San Diego, one on California).

Carl DeMaio at the Tierrasanta Albertsons

I can attest to how active and effective DeMaio was during the campaign for the ballot measure. He went to grocery stores, malls, and other public facilities all throughout the city to directly confront the distortions presented by the city’s pubic employee unions.  In fact, here was a typical exchange between DeMaio and a union member sent specifically to target the pension reform measure at that event:

Impressively, Carl was extremely polite during the entire discourse — as well as extremely informative. It this time vile attacks based on bold-faced lies, such civilized dialog was quite refreshing and a testament to the adult approach so often lacking in today’s politics.

The union member insisted the entire pension problem could be solved by minor fixes. As Carl noted: “This is not something can be solved by going around the edges. The real solution means going to the core of the problem. The City of San Diego cannot have a budget that, at its center, is funded by a Ponzi Scheme.”

During this chat, I overheard the union member complain that he would lose all he paid into the system and its interest. In fact, his entire focus was on all HE would lose.

This direct approach at the local level may be just the activity that saves California from fiscal collapse. Additionally, San Jose also passed a similar pension reform measure the same day. As  investment firms project several California cities collapsing under the weight of public employee pensions, the San Diego approach can be the template for future initiatives.

Our entire team of citizen pundits promoted and spread the information related to Proposition B, which was also critical to pushing-back on the heavy union campaigning against the measure. San Diego conservatives understood this was a must-win vote. As W.C. Varones noted in writing about Scott Walker’s victory in Wisconsin:

“This was the moment when the rise of the [unions] began to slow, and our [country] began to heal.”

Proposition B’s passage is when San Diego began to heal from its public employee pension mess.


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If a 401K is good enough for private workers, it’s good enough for public workers. By changing the dynamic of pensions it reminds workers that we are all really in it together — their pension will do only as well as the country does. That’s not a bad message to send, and (I would hope) it’s a simple message that can be explained while standing in front of a supermarket entrance.

    Actually, the 401K system is already in place for Federal government employees – only employees hired before 1984 receive a traditional pension. Everyone hired into the federal government since then has a 401K plan. It’s state employees, not federal, who are in line for these pensions.

    “Busting the air traffic controllers union isn’t Reagan’s only legacy in the federal workplace. Creation of the Federal Employees Retirement System is another important one.

    FERS was designed to be a portable and modern retirement program, in line with private-sector benefits, though certainly riskier for workers and retirees, according to Jacqueline Simon, public policy director of the American Federation of Government Employees. It replaced the old Civil Service Retirement System, with its defined retirement benefit, which now covers a minority of the federal workforce.”

      Giglawyer in reply to Cassie. | January 23, 2013 at 12:24 pm

      We should do this for all of our elected federal officials as well. No more pension for life for these clowns.

2nd Ammendment Mother | January 22, 2013 at 4:00 pm

I’m just curious why cops/firefighters always get exempted from these deals – other than the fact that their unions would go bonkers, even out here in right to work states? The more I learn about them, the more these pensions seem like a form of indentured servitude – even when it’s a luxurious servitude.

Just from the few cops and firefighters I’ve known, it seems that the pension and civil service system eventually puts limits on their career choices. I can’t count the number of older couples where the wife relocated for work and the husband had to stay behind because they couldn’t afford to give up his pension. Likewise, I’ve had a couple of cops feel like they couldn’t speak out against corrupt superiors because if they were fired, they would lose their retirement (and I can link to local whistleblowers where that did in fact happen).

    There’s a social engineering problem here, which the police and firefighters unions have exploited and taken advantage of.

    Police and Firefighters are considered to have more “dangerous” jobs than the standard government desk jockey, and the unions have argued that those “dangerous” jobs are under-compensated through “normal” weekly wages, and thus those employees should be able to have a “defined” future income regardless of market fluctuation. Those Union (thugs) claim that the “nominal” wage for a police or firefighter employee would have to be so high that it would otherwise bankrupt the municipality. They sell it as a form of “deferred” compensation.

    It’s a lie, but it’s an effective lie, because it plays both to the idea of commitment to those who are supposed to be serving the public, as well as fear of lack of safety should the police “become lax” (or worse, corrupt) in performing their jobs because they are not being “sufficiently compensated.”

    PS – remember a few years ago the fit that the El Paso PD threw when their union contract was opposed and how the union blatantly (but not explicitly) threatended that if they didn’t get their way, they would “slow down” response times to crimes and would take “vactation” time that was “owed” to them? It becomes a self-fulfilling prophecy, because the public then panics, calls the police MORE often, they get a slower response, and the Unions use it to justify hiring more people or higher wages for “more hours” of service in order to meet the “demand” that their actions caused in the first place.

      2nd Ammendment Mother in reply to Chuck Skinner. | January 22, 2013 at 5:06 pm

      Intersting that you cited the EPPD case since this item has been floating around regarding the current conditions of their pensions for a few months:
      “You may remember a few years ago we voted to save the police and fire pension fund because they squandered it away on God knows what. Well, it appears they’re back to being on the verge of not being able to pay their pensioners what they owe them.

      Apparently they handed themselves three or four percent Cost of Living Adjustments (COLA) every year since the taxpayers bailed them out. Why do they call it a “cost of living adjustment?” Using the word “adjustment” implies that it may be raised or lowered and we know that they never lower your pay for a cost of living adjustment. Why don’t they call it a COLI? Cost of Living Increase is more accurate.

      Social Security COLA has been in the last four years – 0,0, 3.8 and 1.7. Most pension funds try to follow that trend. Obviously the police and fire pension board is just voting themselves huge retirement raises every year without realizing that they can’t afford it in the long-term… which has become the now-term.

      My source says they want council to bail them out. And what better time to ask? You have the mayor who needs some support and a way to stay relevant.”

        Oh, I have a pretty good idea of what they squandered their bail out payment on. The pension plan probably has a specific set of investments that it can put the money into based on specific denoted returns, specifically municipal and corporate bonds and treasuries (thus, minimal to “zero” risk).

        The problem with those investments in the past several years is that they have grown almost zero. 10 year treasury rates have barely cracked 2% for a year, and were sporadic before that going back to January 09 (incidentally when teh One was inaugurated). When you’re voting yourself a 4% increase every year, but only making 2% income from the investments, you start to eat principal to make payments, which accelerates the reduction in income, until you run out.

        Now, had they been allowed to invest in something with a bit more risk, they might have been able to pull it off, but not with a “safe” play.

        As for why, it’s the same reason that any elected official fails to plan long term: they’re only looking to their next election, because if they don’t survive that, there’s no point. They promise 4% to head off a challenger, but then they have to deliver, or else be voted out in the next round. Later if they claim “austerity” they draw a challenge for “not keeping up with past performance.”

        I don’t think that Mayor Cook or the Council will go for a bail out this time. Cook should still be thanking whatever Deity he prays to that he survived the recall on a technicality after giving the finger to his voters on “non-married benefits) and with the amount of corruption here in the city and county government, something tells me that the Council doesn’t want anybody investigating too deeply. Also, they have a deeply divided electorate that is already just about to revolt after having the “Ballpark” shoved down their throats.

        How many city/county/elected officials and employees have been indicted in the past 24 months? 30? 40? More? (at least 14 police officers, 7 ISD school officials, 2 sitting judges, a county commissioner, and those are only the ones that come immediately to mind). No, I think that Cook & Co are going to quietly keep their heads down and pray that public disgust at the Police coming back for yet another bite at the apple convinces the Union to give something up.

        Also, I know that the city and county are already under austerity conditions (hiring freezes and attrition cuts, if not yet actual layoffs). The County Attorney’s office literally JUST got permission to hire another criminal division attorney, and that person will, on day ONE, have a case backlog of 12,000 cases (yes, twelve THOUSAND cases).

        I have a feeling that the City is going to hold out its pockets and say “sorry, you didn’t budget properly, and we’re broke so we can’t help you (the Union). You deal with it.”

I live in San Diego and have lived here in San Diego all of my adult life.

The ‘public sector’ employees that have been forced into 401(k)’s are all the ‘new hires’. Existing employees retain what they have already but they can also jump into a 401(k) if they care to and have two City sanctioned retirement accounts. It’s a one-time deal though so any existing employees that don’t get in within a certain time frame will not be able to participate.

The burning question though — why were San Diego Police exempted from this new requirement that everyone else that is newly hired has been relegated to? They’re not CalPERS member retirees when they retire — they’re City of San Diego pensioners. SDPD is the largest department the City of San Diego has by far — and the attrition rate is massive. Not as bad as it once was — but it is still very high. SDPD officers are still leaving for other law enforcement departments for higher pay and greater benefits throughout California, as well as Nevada and Oregon where the California POST peace officer training requirements are accepted. Maybe that’s why. But if such a large percentage of ‘new hire’ LEO’s are fleeing SDPD after San Diego pays all that money to recruit, train, outfit, equip, and deploy them anyway despite being permitted to retain ‘public pensions’ — what’s the point in exempting them?

Carl DeMaio certainly wouldn’t answer that burning question when asked numerous times. His replies have always been undecipherably cryptic (flim-flam) and/or essentially non-responsive.

I guess it’s still a ‘Union thing’ after all.

The state is terrible at employing people and executing duties. The body of a cites government work should be auctioned off to the lowest bidder or put up for a vote before the public.

    Pause, just for a second in order to clarify: You do NOT want simply the “lowest bidder.” You want the lowest bidder who is going to perform the services demanded correctly, competently and efficiently.

    I see this problem literally ALL the time: A governmental unit goes through a open or sealed bid process, has the same group of individuals or companies bidding on the work and always gets the lowest bid from one particular company. That company comes in and performs the work. Upon completion, the work is wrong, not up to code, or fails in some other manner less than 6 months from the completion date. Yet the Governmental Entity continues to select this contractor because “they were the lowest bidder.” I have told this particular Governmental Entity “STOP HIRING THIS CONTRACTOR!” more than once, and they have responded by saying “if we don’t hire them, we could be sued for overpaying.”

    I told them “You’re ALREADY overpaying, it just is coming from a DIFFERENT BUDGET LINE because you’re having to REPAIR their shoddy work with your OWN staff.”

      What do you do when the worker is a government employee? You can’t sue them or fire them. Lowest bidder would be a vast improvement. But I am not committed to lowest bidder, or we could do lowest bidder with bonding.

        I’m ALWAYS a big fan of bonding of public contractors.

        You just have to make sure that the municipality is willing to pull the trigger on the bond backing performance if the contractor fails to deliver (sometimes the don’t, largely for personal reasons which border upon public corruption).

        As for what to do when the worker is a government employee (division, actually is more appropriate): figure out who their elected boss is and either support their opposition in the next election, or run against them yourself and publicly expose the shortcomings of the division and make it your platform to correct them.

        Some people can’t. Some people won’t. But somebody MUST.

Noblesse Oblige | January 22, 2013 at 9:52 pm

Very few private sector companies have defined benefit plans these days. Government workers can no longer expect to be treated in a privileged manner with pay grades higher than equivalent private employees, super benefits and early retirement at nearly full salary. The people who are paying for these perks are making less than they are.

Mexifornia cannot get its head and hands around the real solution to government and union excess. Here is how to do it.