San Diego, where voters froze public employee salaries and switched their pensions to 401(k)s, is seeing its employee costs go up.
“The city has to ramp up payments because it is closing the pension system to the vast majority of its future workers,” this story says. ”The pension actuary said the initiative was responsible for $27 million of the overall $44.3 million increase.”
Whew. So when you vote to bring employee costs under control, you pay more, because the city has to fill in the pension funding formerly supplied by young hires, and your deficit has to be paid off. But the pain is relatively short term — if higher payments through 2025 is short term.
“The overall benefit of Prop. B outweighs the fact that we’re having to make a little higher payment up front,” a coucilman explained. “When it tails off toward the end everybody will start seeing the savings. It’s kind of like paying off a loan early. You don’t have to pay as much interest but sometimes your payment up front has got to be a little bigger.”
The city’s annual pension payments are projected to increase steadily, peaking at $323 million in 2025. The payment then drops sharply to $82 million in 2029 after the bulk of the $2 billion-plus liability is paid off.
Gravy trains. Even parking them in the barn is expensive.