New Ruling Puts San Diego Pension Changes in Limbo

In 2012, San Diego voters approved Proposition B, a measure that funneled most new city hires into a 401(k)-style retirement plan, as opposed to the defined-benefit system previously available to everyone.

But a California labor board on Tuesday overturned the pension overhaul, and ordered the city to begin paying back lost benefits to those in the 401(k) plan.

From the San Diego Union Tribune:

City Attorney Jan Goldsmith said he hopes to quickly get City Council approval to appeal Tuesday’s ruling by the Public Employment Relations Board.

[…]

Many city budget projections and proposals rely on future pension savings creating by Proposition B, so any softening or elimination of the measure could have a significant effect.

Zucchet said the city has hired roughly 2,000 employees without pensions since the cutbacks took effect in July 2012, noting that Tuesday’s ruling requires the city to backfill pensions for those workers, pay them 7 percent interest as a penalty, and cover their attorney’s fees.

“I don’t know whether it’s $5 million or $500 million, but if I had to guess I’d say it’s somewhere in the $100 million range,” Zucchet said.

Goldsmith called the ruling unsurprising and said he was confident it would be overturned based on past defeats of PERB by the city. PERB unsuccessfully tried to keep Proposition B from going to voters, and was rejected when it tried to block implementation of the measure after voter approval.

Labor leaders, on the other hand, urged the city to cut its losses and accept the ruling, rather than spend money on future appeals.

Photo by jypsygen via Flickr CC License