San Diego One of Many Cities in ‘Pension War’

The San Diego skyline.

The pension debate in San Diego is complicated by the fact that city workers do not participate in Social Security. Photo: Tomcio77/Flickr

By Katie Orr

Franklin Lamberth took a break from his garbage route and stood in the sun next to the truck he drives for ten hours a day, four days a week. Lamberth has been a San Diego sanitation worker for nearly 20 years. He says he wouldn’t want to do anything else. But still, morale in his department is low, and he says his coworkers keep turning to him for reassurance.

“And they come to me because they think I have the answers,” said Lamberth. “And all I can tell them is, through life I roll with it. I’ve had a nice run. I don’t see any promise.”

Lamberth will get his pension when he retires, about $24,000 a year. But that’s all he can count on. Like all current city employees, Lamberth won’t receive Social Security because the city isn’t enrolled in the system.

Lamberth is caught up in what some have called San Diego’s “Pension Wars.” The latest battle takes place at the ballot box in the June primary. To hold down future pension costs, Proposition B seeks to impose a five-year pay freeze on current employees like Lamberth. It would provide most new hires with a 401(k) in which a retiree’s income depends on how well their investments perform. Mayor Jerry Sanders say San Diego’s pensions troubles started because city leaders made bad decisions.

“This takes that out of that realm,” said Sanders. “In a 401(k)-style system you have to make the payment each year. You can never put that off for future generations. And I think our council has been very responsive. But a few councils caved and gave way too much and didn’t pay the bills and that pushed it off onto the future generations and that simply can’t work any longer.”

The pension wars began in the mid-90’s. San Diego wanted money to build a new ballpark and host an expensive National Republican Convention. City leaders convinced the retirement fund board to accept lower pension payments in return for the promise of increased retiree benefits. In 2002 San Diego underfunded its retirement system again. The moves left the city with a pension deficit of more than $1 billion. Next year’s payment is expected to eat up more than 20 percent of the city’s general fund.

Proposition B is the Republican answer to the crisis. But there’s a hitch — remember San Diego is not enrolled in Social Security. In the 1980′s employees voted to opt out because they were promised a good pension and healthcare in retirement. Michael Zucchet with the Municipal Employees Association, the city’s white-collar union, says those benefits have been slashed or eliminated over the years. He says to make more cuts when workers have no Social Security to fall back on raises a red flag.

“So the deal that was cut with employees, so to speak, and the reason they were willing to give up Social Security is now gone,” said Zucchet. “Add that to the fact that Proposition B intends to take away even a defined benefit pension, and there’s really some grave fairness issues here.”

If Prop B passes the city may be required to re-enroll in Social Security.

San Diego State Social Work Professor Thom Reilly wrote a book on city pensions. He says San Diego is in a unique spot.

“It does have pretty significant implication, nationally,” said Reilly. “I don’t know of any other place in the United States, public or private employers, where they only offer a 401 (k).”

Reilly says if the federal government lets San Diego stay out of Social Security it could open up the door for other employers who want to leave the system. He says the government can’t afford to lose any more contributing workers when it’s trying to extend the life of Social Security.

San Diego Chief Operating Officer Jay Goldstone says whether or not the city rejoins Social Security is a matter for negotiations with the unions. Whatever happens, Goldstone knows San Diego is being watched by cities across California and beyond.

“A lot of it is just because this is pension reform, Social Security aside,” said Goldstone.

Regardless of what happens in the coming pension battle, sanitation worker Franklin Lamberth knows things are changing, but he feels like it’s out of his hands: “I’m not going to vilify the taxpayers, the city council. You know what I’m going to do? I’m going to feed my family the best way I can.”

With less than 2 weeks until the election, recent polls show strong support for Proposition B as the pension wars reach their peak.

Related:
Read about San Jose’s pensions debate here.