San Diego pension reform

SAN DIEGO (KUSI) — The city’s pension system last year shelled out over $400 million in checks to retired city employees and these huge payouts will continue for many more years to come.

At the top of the list was a fire captain whose check last year was $743,868, so how is this possible?

This is largely because of what’s known as the drop program, which allowed employees to retire, but continue to work another five years. Their salary went into a special account that draws interest and is paid as a one-time lump sum payment after five years.

Twenty-one others, mostly firefighters, cashed checks of more than half a million dollars, and about 900 employees got lump sum payments in excess of $100,000.

The numbers come from a public records request by the UT Watchdog, but they don’t tell the entire story.

"We have to be fair, that’s a one time payment, it’s a huge payment, it’s basically the payout of that drop program," said Richard Rider, Chairman of San Diego Tax Fighters.

The drop account draws on percent interest according to Union president, Michael Zuchet, and it’s the employee’s own money, which is not calculated toward their annual pension.

Rider said these employees were part of the old pension system and there are several in the drop program who have yet to retire.

"We have all these people in the pipeline who are under the old pension program and it’s gonna take years and years of us having to pay millions and millions and even billions of dollars to take care of that problem," Rider said.

Currently, it’s a $2 billion problem and it’s pushed the annual taxpayers contribution to the pension system from $50 million to an average of $260 million over the last three years and that number happens to be the estimated payment for 2017. Pension payments are what caused the financial crisis in the early 90s.

But wait, didn’t we reform the pension system years ago with Proposition B, that shifted employees into a 401(K) type system, except for police.

"t basically stemmed the bleeding, it did not solve the problem," Rider said.

The cops are the only employees to remain under the old retirement system, to address the competitive pressure to keep police officers from taking jobs elsewhere and attracting new recruits to the force.

Again, to be fair, the large payouts are going to the city’s top brass and public safety workers. The average pension lower level city workers, for example, is in the $35,000 range.

The amount owed to city retirees over the next couple of decades has grown to $6.5 billion, but the systems value of assets has dropped to $3.8 billion because of the global economy.

Categories: Local San Diego News