SAN JOSE — Measure F on the city’s November ballot promises to end years of acrimonious litigation over employee pensions by replacing a plan voters overwhelmingly approved four years ago with a union-backed compromise.
To some critics, it’s a potentially costly capitulation that would abandon the aggressive Measure B pension cuts that nearly 70 percent of city voters approved in 2012 to contain retirement costs devouring a growing share of the city’s budget.
“I think it’s critical that voters understand the true financial impacts that will be caused by Measure F,” said former Councilman Pete Constant, vice president of the Silicon Valley Taxpayers Association, which sued to require the city to put the settlement agreement hashed out last year before voters. He was a leading Measure B backer on the council and is concerned Measure F doesn’t go far enough to protect taxpayers and increases pensions for a chunk of current employees.
But Mayor Sam Liccardo, along with a coalition of labor and business leaders who also supported Measure B, say rather than abandoning its pension reforms, Measure F will lock in the equivalent retirement savings from Measure B that survived a court ruling.
Beyond that, supporters say Measure F would avoid the risk of losing hard-won reforms in court appeals. And it would end the bitter fighting between City Hall and its unions that has proven a barrier to hiring, particularly in the Police Department, which has seen its ranks dwindle by a third since 2012.
“Now it is time to put politics aside and unite behind a fair resolution that saves taxpayer dollars while ensuring our city can attract and retain police officers and firefighters to make our neighborhoods safer,” Liccardo wrote in favor of the measure.
If passed by a majority of voters in November, Measure F will replace Measure B with a settlement the city negotiated with its 11 unions last year. Labor groups would drop their lawsuits.
Unlike Measure B, the Measure F settlement doesn’t touch current employee pensions. That was Measure B’s most controversial provision, but also was thrown out by a trial judge in 2013. Instead, Measure F brings new hires into a new scaled-back retirement plan, though one more generous than Measure B permitted and more in line with changes in state plans adopted after Measure B passed.
Measure F would maintain the elimination of retiree bonus checks. It also closes a defined-benefit retiree health care plan — a provision that wasn’t part of Measure B — that yields the bulk of savings for the city, as well as for employees, who share the cost.
But opponents argue the agreement has some hidden costs that aren’t being talked about. For example, roughly 1,300 current San Jose employees would get retroactive pension increases — only 5 percent are police officers. And any former city employee can return into the old pension system, regardless of when they left. The same is true for government employees hired before 2013 from other cities and agencies.
Critics also say the compromise lowers retirement age by three years.
The mayor’s office said the retroactivity provision would increase the city’s pension obligations by $7.3 million, a cost to be split between the city and its employees.
When voters approved Measure B, the city’s yearly costs for its employees’ retirement had more than tripled from $75 million to $250 million over a decade. Since Measure B in 2012, according to the mayor’s office, annual retirement costs have topped $300 million and are projected to reach $350 million by 2018. Part of the increase, the mayor’s office noted, is due to the city adopting more conservative assumptions about investment returns on pension funds.
Despite concerns from some quarters, there is no formal opposition to Measure F. The Yes on Measure F campaign, led by Liccardo, had raised $578,500 as of Thursday. The mayor’s goal is to reach $1 million.
With the exception of Councilman Pierluigi Oliverio, most of the San Jose council members who had backed Measure B support Measure F, including former Mayor Chuck Reed.
