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Unions Accuse San Jose Mayor Of Exaggerating Pension Costs

SAN JOSE (CBS SF) -- San Jose's elected officials are being accused of exaggerating projected retirement costs in an ethics complaint filed by three unions Thursday.

The complaint, filed with the city's elections commission, alleges that Mayor Chuck Reed, the city's retirement services director Russell Crosby, and former retirement services employee Michael Moehle misled the public about the five-year projections for employee contributions to retirement plans.

The three are accused of propagating to the city council and the public "knowingly false, misleading and deceptive fiscal year 2015-2016 city pension contribution cost of $650 million," according to the complaint.

It was an estimate that Crosby conjured off-handedly at a Feb. 14, 2011 budget meeting and one that Reed ran with despite being informed that the figure was not actuarially accurate, alleges the complaint.

Last year, the council considered declaring a fiscal emergency and in December, voted to place a pension reform measure on the June ballot on the premise that skyrocketing retirement costs are resulting in service reductions and layoffs of hundreds of workers, including police officers and firefighters.

The three unions—the San Jose Police Officers' Association, San Jose Firefighters Local 230, and the International Federation of Professional and Technical Engineers Local 21 -- held a news conference Thursday afternoon to discuss the complaint.

Firefighters union president Robert Sapien and Jim Unland, president of the police union, said they want an independent investigation into the complaint.

"We have members who have lost homes, got laid off... to think that any of this was driven by misinformation is frightening," Sapien said.

Sam Liccardo, one of six council members who voted in favor of the controversial ballot measure, denied that the city has relied on the $650 million dollar estimate and dismissed the claim as a "straw man" argument.

"The $650 million figure was never a basis of decision-making by anybody on this council, and to my knowledge never formed the basis of any offer at the negotiating table with the unions," Liccardo said.

San Jose has billions of dollars in unfunded liabilities for retirement benefits. The city's annual retirement costs have increased from $63 million in 2000 to $250 million this year.

Reed's proposal calls for setting limits on retirement benefits for new employees and retirees, but the ballot measure would not reduce payments to current retirees or cut accrued benefits that employees have earned for the past five years of service.

The latest version of the ballot measure includes reforms such as placing new employees into a lower-cost, hybrid retirement plan and giving current employees the option to either keep their current retirement plan by paying a larger share of the cost or switching to a lower-cost plan.

(Copyright 2012 by CBS San Francisco and Bay City News Service. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.)

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