Employees who joined the city workforce after July 20 in 2012 are already costing th ecity less in retirement budget spending than the employees who worked for the city during most of Mayor Jerry Sanders time in office. Mayor Kevin Faulconer plans to lower the cost of the San Diego contribution to its employee retirement plans near 2 million dollars.
The proposal to save more general fund money was a large enough remedy for overspending at City Hall to have full coverage in a pension section in the Independent Budget Analyst's report reviewed by the city council budget committee on MOnday.
The choice made by the city's employee unions to take a pay freeze made a large contribution to the drop in pension costs Faulconer plans on. His budget staff also assumed a larger pension ivnestment return for the city in the current fiscal year than previously assumed.
Removal of the Public Works Department's Engineering & Capital Projects from general fund spending made the largest impact on the projected retirement spending budget.
Pension system costs add up to over 37 percent of budgeted salaries and wages, and close to 58 percent of the payroll count for members in the pension retirement plan earning pensionable salaries.
Faulconer also counts on a 0.4 million dollar decrease in spending on the city's Supplemental Pension Savings Plan. Cost cutting in the retirement system stays a mandate at City Hall while the city continues to carry a large pension liability. An increase in the city's pension liability funding from 68 percent to 70 percent in the proposed budget counts only for a small improvement on remedying the city's earlier funding failure.
Employees hired sicne the 2012 July will continue to invest earnings in the SPSP-H retirement savings plan used by hourly employees until November 25th in 2015. The interim retirement plan started following the passage of Prop B by voters in 2012 lowers the city's draw on the general fund until the new 401(k) style retirement management plan takes the place of the old pension system.
Fringe benefits cost cutting has a lead role in Faulconer's proposed budget cutting down city spending to a manageable amount.
THis is a Center line Policy Alert.