City Auditor Sharon Erickson had a stern warning for the San Jose City Council: the current pension system is $2 billion in the hole and unsustainable as is. “Costs have skyrocketed. They’ve grown sevenfold over the last 20 years,” she said, casting the blame on increased benefits approved over the past decade, 3 percent automatic annual raises, and early retirement ages, which are as low as 50 for police and firefighters. Mayor Chuck Reed agreed, warning that if the city does not do something about pension costs, it will run out of money in 17 years.  This year alone, bonus checks are expected to total $1.4 million for retired police officers and firefighters and $1.6 million to other city employees. With the city facing its tenth consecutive budget deficit, the Mayor warned, something has to be done.

The data had an impact on the Council, which voted on Tuesday to suspend bonus checks to retired employees for a period of eight months. By then, Propositions V and W may have been passed, giving the city greater leeway to cut pension costs.

Four councilmembers opposed the decision. Ash Kalra, Nora Campos, Kansen Chu, and Nancy Pyle argued that older retirees, who do not receive the larger pensions, need the bonus checks. This received the backing of Bob Leininger, president of the San Jose Retired Employees Association, who pointed out that some retirees earn pensions of $25,000 or less. The councilmembers also argued that not enough has been done to reach out to retirees before making the decision to cut their bonuses. Kalra said that the failure to communicate with those affected the most is why “morale is so low.”
Read More at The Mercury News.