More Proof SJ Chose Wrong Path for Pension Resolution

There’s good news and bad news in the City of San Jose’s just-released Comprehensive Annual Financial Report on its two pension funds.  The good news is that the investment returns for the Police and Fire Plan (which covers police and fire) and the Federated Plan (which covers everyone else) were 13.5% and 14.2% respectively.  That’s well above the 7.125% and 7.25% assumed rates of return for those two funds.

The bad news is that if City pension dollars had been invested in the California Public Employees’ Retirement System (CalPERS), the return would have been even higher, further reducing the City’s unfunded liability. The state reported an 18.4% return.

Moving to CalPERS may or may not be a good idea, but it certainly has more potential that the City’s failed legal strategy to attack public employee pensions.  Some City unions had expressed interest in having the City consider shifting its pension assets and liabilities to CalPERS, but former Mayor Chuck Reed and his allies, including current Mayor Sam Liccardo, would have none of it.  Why, you may ask.  Because San Jose’s brand of pension reform is, and always has been, about control over City workers, not just what’s financially best for the City.

 

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1 Comment

  • truthserum Jan 22, 2015 at 5:14 pm

    The real reason why Reed, Liccardo and the council employee pension hating gang did not switch to CalPers is that as long as the retirement fund makes an investment return (capital gain), that covers the city’s cost / share, the city doesn’t have to pay their share and any excess above that amount, on the gain of the investment, goes to the city to spend on whatever it seems it needs to spend it on. That has been going on for decades and that is the true unfunded pension liability. The city never put the extra money aside for a rainy day and because of that the employees are screwed and have to pay what should have been paid by the city in the first place. Robbing from Peter (employee) to pay Paul (employee).

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