Reforming Pension Reform: San Jose Votes on Compromise Deal With City Unions

On Nov. 8, the divisive issue of pension reform will be once again before San Jose voters. They’ll be deciding on a ballot measure designed to end a bitter legal battle over a previous pension reform measure. If passed, Measure F would roll back cuts to employee pensions that were approved by city voters four years ago.

Nearly 70 percent of San Jose voters approved the controversial Measure B in 2012 to rein in retirement and disability benefits that city leaders said were forcing cuts to critical services. But police, firefighters and other city employee unions sued to block the measure. Now, both sides are asking voters to support a compromise settlement reached last year between the city and its unions. Mayor Sam Liccardo, who supported the original pension reform package, helped broker the deal.

"The lesson learned here is that we can achieve the savings we need in reforming our pension system and retiree benefits," Liccardo says. "And we can achieve them through agreement."

Liccardo says Measure F would restore disability and pension benefits while still saving $42 million a year -- primarily through closing the retiree health care program to new employees.

There’s no organized campaign to oppose Measure F. But critics, including the Silicon Valley Taxpayers Association, say the union-backed compromise reneges on the city’s commitment to curb retirement costs under the 4-year-old Measure B. Former City Councilman Pete Constant is the association’s vice president. He says the measure would restore pension benefits to unsustainable levels and once again saddle San Jose taxpayers with millions of dollars in unfunded liabilities.

"It's really about: Can we afford to continue making promises that we don’t know that we can keep?" says Constant. "And are we going to become more realistic in our projection of costs and realistic in providing benefits to employees?"

The conflict over pension reform in San Jose has taken its toll on city personnel, especially in the Police Department which has lost more than 600 officers -- many leaving for other agencies with better benefits. Union president Paul Kelly says that exodus has officers stretched dangerously thin.

"Right now, that’s where we’re at," Kelly says. "We’re at a state of emergency. If Measure F doesn’t pass, it’s much worse than that. Much."

Measure F is supported by some major backers of Measure B, including the Chamber of Commerce and Measure B’s chief architect -- former Mayor Chuck Reed. He says it’s not a repudiation of his flagship legislation but rather an affirmation. He says it locks in savings from the previous Measure B and shields them from the threat of litigation.