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PENSION REFORM: San Jose police, firefighters' unions sue city over pension disclosure issues

Mayor calls suit 'political trick to distract voters from fact pension costs have tripled in San Jose

In the latest salvo in a battle over San Jose employee pension reform plans, a lawyer for three unions has filed a complaint against Mayor Chuck Reed and the city with the U.S. Securities and Exchange Commission.

The complaint was filed Monday by Christopher Platten, a lawyer for the San Jose Police Officers' Association, San Jose Firefighters Local 230, and the International Federation of Professional and Technical Engineers Local 21.

It alleges that documents for the sales of two city revenue bond series in 2011 failed to disclose that Reed has estimated that pensions could cost San Jose up to $650 million per year in the 2015-2016 fiscal year.

The complaint asks the federal agency to investigate the alleged failure to disclose and "take appropriate remedial action."

Tom Saggau, a consultant for the unions, said the union members believe the actual cost of funding pensions in 2015-16 will be much lower -- $308 million.

But he said that because Reed has "vigorously" voiced the worst-case $650 million estimate in advocating pension reform, he should be held to his words.

"Did he deceive the public or did he deceive potential bondholders? He can't have it both ways," Saggau said.

Reed said in a statement, "This is yet another bogus complaint, full of misrepresentations, which was filed by the union lawyers as a political trick to distract the voters from the fact that our city's retirement costs have tripled in the last decade to $245 million per year."

In recent statements, Reed has said the city currently estimates that annual pension costs will increase from the present $245 million to $400 million by 2015-16, and that $650 million is a "ballpark number" for the worst-case scenario if actuarial assumptions change.

Reed spokeswoman Michelle McGurk said the SEC complaint appeared to be aimed at a March 6 City Council meeting at which the council is slated to decide on the final terms of a proposed pension reform measure on the June ballot.

Unions and city officials have been negotiating on those terms, but have thus far failed to reach an agreement.

— Bay City News Service

Comments

Posted by Greg, a resident of another community
on Mar 10, 2012 at 5:20 pm

Convert ALL civil employees to 401K's before we all go broke. No more public guarantees for pensions. You can live like the rest of us..


Posted by Been There, a resident of Another Pleasanton neighborhood
on Mar 10, 2012 at 10:04 pm

Totally agree with Greg (above) ...live like the rest of us.


Posted by Dan, a resident of Bridle Creek
on Mar 11, 2012 at 9:46 am

Greedy, greedy, greedy...

Public sector unions are going to fight to the bitter-end to keep their dues even though they know it would simultaneously bankrupt cities. Gotta give 'em credit, they're tenacious even if they're short-sighted.

Agree with Greg and BT.

Dan


Posted by hoops, a resident of Mohr Park
on Mar 11, 2012 at 11:40 am

The simple and painful truth is that public sector unions do not deserve and have not earned the ridiculous pensions they think they are entitled to.This has been argued forever but look me in the eye and with a straight face tell me why you can retire at 50 or 55 with this crazy compensation.They were paid extremely well while working.I guess we can have the cities and states go bankrupt or we can honestly address the I am entitled to this because some idiots made a horrendous agreement years ago.How many people have lost homes,jobs,a big chunk of their 401k because of the financial crisis.Now it is time for these people to make an unplanned for adjustment as well.Work longer like everyone else and cut the benefits by whatever is needed.Hell,most fireman work so hard now that most of them have a second job while they are fireman.How many full time people with careers can do that?


Posted by Steven, a resident of Pleasanton Meadows
on Mar 12, 2012 at 12:57 pm

Greedy, no kidding!!!

Have to blame the politicians too. See what is happening to the city of Stockton: Web Link

The guy they brought to clean the mess up called it a "Ponzi scheme".

The politicians gave themselves and the public sector unions a fantastic deal. Free health care for life after one month of employment, in the case of the city of Stockton.

Wait till the unfunded pensions start hitting closer to home.


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