Monday, June 24, 2013

Fixing California: San Jose Mayor Chuck Reed

UT San Diego must have a series of articles called Fixing California.  The San Jose mayor is desperately trying to address soaring pension costs and underfunded liabilities, it seems.  But, wow. The increases are amazing.

But what are you to do?

We’ve said, based on what we can do legally, we can make them pay more. We’ve always been told you can lay people off, you can cut their pay, and you make them pay more. So we did cut the pay — 10 percent pay cuts everybody took. We did layoffs. And now we’re down to making them pay more. But what we did that’s probably more interesting is we recognize an additional 16 percent is a heavy burden for employees, all of them, and very difficult for some of them. So we’re giving them an option to choose a lower cost set of benefits — still a defined-benefit plan, just at lower accrual rates, lower cost-of-living adjustments and later retirement ages. If they choose that then they don’t have to worry about paying the extra 16 percent.

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