CITY WORKER BENEFIT: SOCIAL SECURITY?

Prop. B option would become requirement if governor signs Hueso-authored measure

Written by Craig Gustafson
12:01 a.m., Sept. 5, 2012
Updated 8:34 p.m. , Sept. 4, 2012

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SAN DIEGO — The question of whether city workers would receive Social Security benefits under a new 401(k)-style retirement plan would be rendered moot if new legislation is signed by Gov. Jerry Brown.

State Assemblyman Ben Hueso, D-San Diego, has authored a bill that would require San Diego to put most new hires into Social Security now that they’re no longer eligible to receive a guaranteed pension. The bill, which was approved by both legislative chambers last week, is in response to voters in June approving Proposition B, which calls for replacing pensions with 401(k)-style plans.

Supporters, including a leading union advocate, say the bill is needed to ensure that an adequate safety net exists for workers and they aren’t left completely at the whim of the stock market.

“Our concern has always been on giving workers the ability to have some kind of secure retirement,” said Lorena Gonzalez, head of the San Diego-Imperial Counties Labor Council. The bill also eliminates any political gamesmanship during labor negotiations by solidifying at least one aspect of future benefits, she added.

Critics, including the top aide to Mayor Jerry Sanders, say it is nothing more than Sacramento meddling in local public policy and eliminates choice for labor groups that may prefer to stay out of Social Security.

“I think this is lousy legislation,” said Jay Goldstone, the city’s chief operating officer. “Who is Sacramento, let alone Hueso, to impose something on the city? This should be left to the bargaining table. At the end of the day, the city may be very willing to negotiate and re-enter Social Security with its labor forces. But what might be good for one labor group may not be good for another and they should be able to decide.”

Social Security has been a touchy subject at San Diego City Hall since the early 1980s when city workers opted out of the federal program at the behest of then-Mayor Pete Wilson. In exchange, they were promised lifetime health care upon retirement; a benefit that was significantly reduced last year in negotiations with Sanders.

The city has been able to stay out of Social Security ever since by offering pensions that provided equal or better benefits upon retirement — what is sometimes referred to as the Safe Harbor provision.
Under Proposition B, pensions are gone for all new hires except police officers. The new retirement benefit is to be a 401(k)-type investment vehicle, possibly including Social Security. The exact benefit, which is capped at 9.2 percent of salary for general workers and 11 percent of salary for public-safety employees, is subject to negotiations.

If the Hueso bill becomes law, the city would be forced to put workers in Social Security, which costs about 6.2 percent of payroll. That means general workers would be eligible for a maximum 401(k) match of 3 percent and public-safety workers could receive as much as 4.8 percent.

“The state has an interest in ensuring that public employees have a safety net in the future,” Hueso said in a statement.

Republican City Councilman Carl DeMaio, who is running for mayor against Democratic Rep. Bob Filner, was one of the biggest proponents of Proposition B. He said he doesn’t have a problem with putting workers into Social Security but prefers they get to make that choice themselves.

“I’ve always said that if employees want to go into Social Security there’s a mechanism for them to do that,” DeMaio said. “I’ve not looked at the specifics of the legislation, but I think ultimately we should be leaving this up to our cities to decide based on the sorts of retirement packages our employees find most advantageous. … But, at the end of the day, I’m good with Social Security. Ultimately, if the bill is signed by the governor it’s very consistent with Proposition B.”

In a statement, Filner said, “Promoters of Prop. B, including Carl DeMaio, promised that if the proposition passed they were committed to putting city employees back into Social Security. All this legislation does is codify that, so I would expect that Carl would join me in being supportive of the bill.”

Representatives with the city’s white-collar and firefighters unions didn’t respond to queries about the bill.

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