In what they’re calling a “fair compromise,” five San Jose unions today submitted a pension reform plan to San Jose elected officials that they say would provide the city with $467 million in reduced pension costs over the next five years. The unions representing San Jose police officers, firefighters, architects and engineers, middle managers, and maintenance supervisors, submitted proposals that significantly reduce the cost of pension benefits, increase the retirement age, and decrease the rate at which pension benefits are earned. Additional provisions from the police and firefighters unions include providing an option for current and new police and fire employees to move to the California Public Employees’ Retirement System, or CalPERS, pension plan.
“We think this is a good earnest effort,” said George Beattie, president of the Police Officers’ Association, at a news conference in San Jose this afternoon. Moreover, Beattie said the police union would drop its arbitration over whether members’ 10 percent pay cut continues on an ongoing basis, a move that he said would save the city an additional $30 million in the next fiscal year. He said the proposals submitted today are a better alternative to the mayor’s plan, which calls for setting limits on retirement benefits for new and current employees and retirees — a plan that Beattie said is “illegal” because it attempts to nullify employee contracts. Also at the news conference, Robert Sapien, president of San Jose Firefighters Local 230, remarked that in addition to the $467 million in savings, the plan would save the city hundreds of millions of dollars over the long term. He said the plan meets the city’s goals, is legal, and provides immediate savings.
“The savings are substantial and the reforms are real,” Sapien said. Paul Salerno, vice president of the Association of Retired San Jose Police Officers and Firefighters, said it was important to protect the benefits of retirees while crafting a proposal that would provide an alternative to litigation. Thomas Lowman, a chief actuary at Bolton Partners, evaluated the proposals before they were submitted to Mayor Chuck Reed and other officials. The proposals will undergo analysis by the city’s actuaries and financial experts before city officials and the unions meet for a discussion next Wednesday. Reed has said retirement costs are “skyrocketing” and contributing to the city’s 11th consecutive year of budget deficits and service cuts to public safety, street maintenance, libraries and community centers.
The budget shortfall next year is projected to be anywhere from $78 million to $115 million depending on increased retirement contributions, impacts from the state’s actions to eliminate redevelopment agencies, and potential changes in economic conditions. Today, Reed released a statement in response to the pension reform plan submitted by the unions. “I want to thank these five bargaining units for their willingness to work together,” he said. “I look forward to reviewing their proposals and determining how they will impact the sustainability of the pension system, the security of our current and future retirees, the fiscal health of the city, and our ability to deliver quality services to the residents and taxpayers of San Jose.”
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