Negating the vote: Public-employee unions try again to shoot down pension reform

Public-sector unions are trumpeting a new report that suggests San Jose officials overstated the city’s unfunded pension liabilities—even as those officials championed a successful June 5 ballot initiative to cut pension benefits for public employees. The report’s author, California state auditor Elaine Howle, says she fears that people were misled by official pronouncements about the city’s pension debt as they headed to the polls and approved Measure B with a 70 percent majority. “Reporting multiple retirement cost projections in a short period may have caused confusion among the city’s stakeholders attempting to make informed decisions,” Howle’s report argues. “It is unclear which retirement cost projection the voters relied on, if any, when they voted for these changes.” …

At worst, the auditor caught pension reformers exaggerating the problem. Of course, politicians use mistaken or, in this case, debatable numbers all the time. So it’s bizarre—outside of a political context—to see state officials push for a local audit like this one. Naturally, San Jose’s public-employee unions seized on Howle’s report, but their anti-reform spin can’t overcome the facts. As Howle explained: “Although we have concerns with some of San Jose’s projected retirement costs for future years, its actual retirement costs increased significantly from fiscal years 2009–10 through 2011–12. These increased costs appear to have crowded out some of the funding previously available for non-public safety services, such as parks and libraries.”

Unions and their supporters have had no qualms about using fuzzy math to expand pension benefits over the past dozen years. When I reported on a retroactive pension increase in Orange County nearly a decade ago, the unions assured the board of supervisors that the increase would not cost the county a penny, since the new benefits would be paid for by higher premiums from workers and investment returns. A few months after approving the new plan, county officials discovered the increase had raised the county’s unfunded pension liability by $300 million. The unions’ response? Too bad. It’s the responsibility of legislators to make sure they got the numbers right the first time. Once they vote, it’s a done deal.