New city hires in San Diego may have to say goodbye to pensions and hello to 401(k) plans, as voters approved an overhaul to the current pension system.
Final elections results showed a majority of support for San Diego’s controversial pension reform measure, Proposition B.( Wed Jun 06 00:14:24 PDT 2012 $__output )
The measure had 66 percent 'yes' votes and 34 percent 'no' votes.
The 'yes' vote means voters will give the City the nod to implement switching new city hires from a pension system to a 401(k) style retirement plan, except police officers. It also mandates proposes a five-year pay freeze on the pensionable pay of current employees.( Wed Jun 06 10:21:43 PDT 2012 $__output )
CLICK HEREto get real-time elections results.
Mayor Jerry Sanders joined Mayoral Candidate Carl DeMaio and Councilman Kevin Faulconer in creating the measure. He addressed voters Tuesday and thanked DeMaio for his work on the measure, despite recent remarks about the candidate's attitude toward fiscal security in the San Diego budget.
“This was really a labor of love for a lot of people and we appreciate your support,” said Mayor Sanders.
DeMaio also referred to the success of the measure in a speech to supporters after it looked like he had clinched the number one spot.
“This measure will not only address our city’s financial crisis, but it will be a model to reform unsustainable pension benefits across this state and across this country.”
Faulconer thanked supporters for their help with the measure, assuming it had already passed. He said the vote sends a message to communities all over the state of California.
“This was a citizens’ initiative and the citizen of San Diego have spoken overwhelmingly tonight for pension reform,” said City Councilmember Kevin Faulconer.
An independent analysis of the measure earlier in the election season revealed a few risks and savings. It assumes the plan would save the city about $581 million over 30 years when adjusted for inflation. That savings would come from a five year freeze on pensionable pay.
The measure’s organizers say Prop B could save taxpayers up to $2.1 billion.
For an explanation of the pay freeze, watch this episode of San Diego Explained. In the explainer, we point to a few other risks associated with the pay freeze, such as a judge ruling the freeze illegal, or the city not approving the pay freeze all five years.
However, transitioning most city workers from a pension system to a 401(k) style plan will cost the city $56 million when adjusted for inflation, the report said.
The pay freeze savings should cover that cost, supporters of the measure say.
Yet if the savings from the pay freeze is not actually approved and carried out over five years, the measure’s overall projected savings of $963 million would be “reduced or not achieved” the analysis says.
For more election coverage, visit our Decision 2012 special section.