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Mayor signs off on pension backpay, plus interest

Posted at 4:40 PM, Feb 02, 2022
and last updated 2022-02-02 19:50:55-05

SAN DIEGO (KGTV) — Mayor Todd Gloria has signed off on backpay plus interest for hundreds of city workers who courts ruled were illegally switched from pensions to 401(k) style plans.

The employees were transitioned to those retirement benefits under 2012's Measure B, which San Diego voters approved by a nearly two-thirds margin but courts later ruled was invalid.

In a statement, Gloria said he never supported the measure and called it a public policy failure.

“In the end, this folly billed as a cost-saving measure will cost taxpayers more than $80 million to correct -– and in the meantime has made us a far less competitive employer. I’m pleased San Diego is finally putting this public policy failure behind us," the mayor said.

Gloria approved the pension backpay plus 7 percent interest as mandated by the courts for two of the four impacted city unions: The Municipal Employees Association and AFSCME local 127. Negotiations are ongoing for the other two.

Michael Zucchet, general manager of the MEA, said Measure B was supposed to make the city a pioneer with 401(k) style benefits, but no other cities followed. That made it incredibly hard for San Diego to compete for workers, he said.

"It puts us back on a level playing field with people pursuing public service that the city of San Diego offers the same thing that other cities do," Zucchet said.

Measure B got to the ballot as a citizens initiative, but labor unions challenged it in court. They argued that because then-mayor Jerry Sanders campaigned on its behalf, it was an official city action and unions should have been consulted. The California Supreme Court ultimately agreed.

"Even though the former mayor supported the measure, it was drafted and advanced by citizens, supported by signature drive to get it on the ballot and overwhelmingly passed at the ballot box with a two-thirds vote," said former City Councilman Carl DeMaio, who backed Measure B.

From July 2012 to July 2021, all non-police city workers were compensated with 401(k) plans, not pensions. The city has since reinstated pensions for new hires.

Backpaying the pensions for all four labor unions plus interest will cost the city more than $80 million, with $48 million coming from the general fund and other city funds picking up the rest.