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Voters in 2 major Calif. cities approve retirement cuts

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    San Diego Mayor Jerry Sanders explains pension cut plan for city workers

  • Duration 3:44
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Voters in two of California's largest cities overwhelmingly approving measures -- cut retirement benefits for city workers.

This is San Jose and San Diego both struggling with a mounting pension obligations.

San Diego has -- nearly 32 million dollar budget deficit for.

Fiscal year 2012.

And this year alone officials budgeted 234.

Million for retiree benefits.

Going back in 199913.

Years ago -- retirement funds have spikes and 450%.

Said the mayor had -- he fits get control of this and the mayor is Jerry Sanders at the San Diego.

With me today from Chicago Illinois.

Mr.

mayor good morning here.

Good morning -- -- don't -- -- would find what can this measure guaranteeing your budget.

Well what -- can guarantee is that it will save about between one point two billion in two point one billion.

Time and costs over the next 25 years so will be significant savings.

While the proposal would put new employees for the city.

Make -- -- get this right now except for police officers into a 401K style plan.

These are just new -- -- poised to do anything with a current employees on staff.

Well what the current employees we that initiative called for a five year freeze and personable pay.

Which means they can still get -- erases it just can't be counted towards that pensions so.

That's a big part of savings and in the fact that.

In it knocks down the unfunded liabilities significantly because when the actuaries look at new people -- unit -- -- second look like.

There won't be anybody else joining assistant -- what would you say you know the other -- saying -- -- is blaming the unions for all your problems.

You know you're the well I think I don't -- -- would you -- about that.

Well I I think it's been a combined problem.

Politicians in the past promised them unsustainable benefits and then they stopped making the -- payments.

And the union said we don't care if you make the payments just give us better benefits and both sides knew that was not sustainable.

So what this -- initiative did was put it in the city charter which is the law for the city.

But that you can't do that anymore because in a 401K style system.

Yet to make the payment every year you can't push that -- to future generally seems like such an easy fix.

In -- it it the fifth.

Not when you're fighting with -- labor and fighting with a lot of others bit.

We went out with a citizen's initiative had done over a 100000 signatures on -- put it on the ballot.

And and I think you saw the results -- passed by 66%.

-- you know voters was -- saying that is almost two to one they did this in San Jose to I think the margin there was even larger.

But you're saying today because this measure passed.

That's San Diego was save a billion dollars over ten years is that right.

Well that's exactly right and that's -- because we won't be making that huge payment.

And also -- it starts to ramp up after that the savings in the first few years -- pretty small.

But after that they get significance -- -- -- hundred million a year what they could not do it at a Sacramento state wide.

-- giving contact by other mayors are people trying to see what you're doing out there and perhaps push for the same thing.

You know we're we think that -- sweep certainly the state of California with both San Jose and San Diego two of the largest cities doing it.

But obviously this is an issue nationwide and you can't continue to have defined benefit programs that.

Were designed in the forties and fifties for a very different generation of workers and they're not funded now and you simply can't -- that.

To make you cut all the city services are all the state services simply pay retiree benefits -- simply didn't make sense -- Gloucester mayor thank you for your time we're gonna reach of the San Jose two of -- what they're doing.

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