San Jose has decided that a Social Security-level pension plan isn’t right for the city.
Their vote signaled that while they were looking for ways to cut their $110 million budget shortfall, they are also looking to do it in an equitable way.
In the last decade, the city’s general fund obligation to pensions has increased nearly 400% to almost $250 million. In the last year, that number rose by $54 million.
At that meeting, the Council also adopted new rules for negotiating with the unions for pension reform, banning private conversations between parties during negotiations and holding open negotiating meetings.
From the Mercury News:
The San Jose City Council decided Tuesday that the Social Security program serving nearly all Americans isn’t good enough for city workers to retire on, despite soaring pension costs that have driven the city’s 10th straight budget shortfall to a staggering $110 million.
Asked to suggest what a reduced retirement benefit might be for future city workers to contain costs, the council voted unanimously to maintain a pension system that Mayor Chuck Reed said is “better than Social Security.” The council approved the cost target that the city manager sought for a new pension benefit, which would mirror that of Social Security. But the council also signaled it would be willing to consider something higher.
The council also unanimously approved new rules — which Reed recommended — for negotiations with the city’s employee unions. The new rules would allow employees to hear and comment on the manager’s presentation about proposals in an open council meeting. Reed said the open meeting should ease union fears that management misrepresents their offers during closed sessions, though he added he did not think that has occurred.
Read the full article here.