San Diego Pension Board Approves $7.5 Million Payout for Police Officers

News Summary

The San Diego pension board has unanimously approved a $7.5 million payout to enhance pensions for around 1,000 police officers hired post-Proposition B. This decision follows the court’s ruling that overturned the proposition, which initially sought to eliminate pensions for a majority of new city workers. With an overall expenditure of $203 million to unwind the proposition, the pension board highlights ongoing obligations for future payouts amid the city’s increased pension-related costs.

San Diego – The city’s pension board has approved a $7.5 million payout to enhance the pensions of approximately 1,000 police officers hired since the enactment of Proposition B. This decision directly results from the court’s overturning of Proposition B, which initially aimed to abolish pensions for the majority of new city workers.

The board’s unanimous 10-0 vote mandates that the city fund this payout, adding to the total expenditures to unwind Proposition B to $203 million. The pension board anticipates at least one additional payout will be needed in the future. This adjustment reflects the board’s responsibility to comply with state laws requiring negotiations with affected labor unions before such initiatives can be implemented.

Under Proposition B, enacted by voter approval in 2012, officers were initially exempt from a complete pension elimination. However, the measure significantly reduced their pension benefits, changing the maximum pension from 90% to 80% of an officer’s highest salary. Furthermore, it revised how top salaries are calculated, mandating an average of the three consecutive highest years rather than any three.

The pension system’s financial breakdown indicates several costs associated with the changes. The implementation of the new pension structure includes $1 million attributed to the difference in pension contributions from affected officers compared to what they should have contributed. Additionally, $900,000 is designated for increased contributions made by the city on behalf of these officers. The bulk of the cost, estimated at $5.5 million, reflects the anticipated expense of the more generous pension benefits.

As part of this approved payout, the pension board has set forth obligations for the city, indicating that $1.9 million in upfront costs will need to be paid in a lump-sum on July 1, 2026. For the approaching fiscal year, the city’s overall pension payments are expected to rise from a record high of $533 million to $540.1 million. The newly incurred $5.5 million in pension costs will be amortized over the span of 20 years alongside the city’s ongoing $3.5 billion pension debt.

This latest decision reflects a broader trend, as similar arrangements have been previously established with three other groups of workers affected by Proposition B. In 2023 alone, the city allocated $193.3 million to re-establish pensions for two groups of workers, including over 3,000 individuals hired after the proposition’s implementation, as well as 705 personnel hired subsequent to a prior agreement to restore pensions. Additionally, the city expended $2.2 million for another 204 workers hired post-Proposition B, though they were no longer with the city at the time of the pension restoration.

Beyond the current payouts, about 1,000 police officers are still engaged in litigation regarding denied pension credits for six months of training they spent in the police academy. The San Diego Police Officers Association has indicated that the financial implications for the city could total around $11 million. The union argues that the exemptions in Proposition B were written to include only “sworn” officers, inadvertently excluding police recruits.

Union leadership describes Proposition B as perhaps “one of the costliest blunders in the history of this city,” asserting that the measure has played a significant role in complicating the recruitment of new police officers.

This recent decision by the pension board underscores ongoing tensions between financial management and employee benefits within San Diego’s municipal governance as the city navigates the implications of Proposition B.

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Additional Resources

• San Diego Union Tribune
• Wikipedia: Pension Reform
• Press Telegram
• Google Search: California Pension Debt
• NBC San Diego
• Google Scholar: San Diego Trash Fee
• CBS 8
• Encyclopedia Britannica: Pension Funds
• Axios San Diego
• Google News: San Diego Trash Fee