San Jose's public pension reform efforts, considered by experts to be a bellwether for municipalities around the country, is again going to be delayed, reported The San Jose Mercury News.
The city council and public unions have agreed to delay proposed pension and pay cuts for another year after a Santa Clara Superior Court judge signed an agreement this week.
In 2010 San Jose voters overwhelmingly supported drastic measures to bring the city's public pension liabilities in line with city revenues. Among other reforms passed by voters, Measure B called for existing public employees to pay more into their pensions.
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The police union sued, and in December of 2013 the Superior Court ruled in favor of the union, citing "vested rights" of existing union members and prohibiting the city from increasing employee pension contributions. In that ruling the court did say the city could cut existing salaries to make up for budget short falls.
The agreement this week between City Hall and the Unions memorializes the Court's ruling. No pension contribution increases can go into effect before July 1, 2015. Furthermore, there can be no pay cuts between now and then, according to the agreement.
This may bring an end to one phase of the litigation and strident labor battle that has coincided with problems in police force retention and unusual spikes in crime in what is historically one of the nation's safest cities. The Superior Court has effectively closed the books on the lawsuit. Each side has two months to appeal, which will determine if the issue ascends up to California's higher courts.
Reform efforts have not come without some substantial changes and victories for City Hall. New hires do have to contribute to their pensions at increased levels.
Mayor Chuck Reed, who will be termed out of office this year, has spent much of his time in office leading the movement on pension reform. His administration says the city is saving $20 million annually from the provisions that survived the Superior Court's amending of Measure B, according to The San Jose Mercury News.
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Nick Thornton
Nick Thornton is a financial writer covering retirement and health care issues for BenefitsPRO and ALM Media. He greatly enjoys learning from the vast minds in the legal, academic, advisory and money management communities when covering the retirement space. He's also written on international marketing trends, financial institution risk management, defense and energy issues, the restaurant industry in New York City, surfing, cigars, rum, travel, and fishing. When not writing, he's pushing into some land or water.
