We know that developers and their insider friends keep public money flowing to private projects, but in San Diego it seems that city unions are just as ready as the fat cats to suck the city dry.
Trying to DROP the Budget Deficit
By DAVID WASHBURN
Nov. 19, 2008
As the denizens of City Hall search every financial nook and cranny for ways to close the city's gaping budget hole, some sights have been set on the DROP program, the now famous pension perk that has long been the target of fiscal reformers.
The city could save in the neighborhood of $750,000 annually if the 13-member board of the San Diego City Employees' Retirement System votes to cut in half the guaranteed 8 percent interest rate paid on money city employees have in the program, according to a back-of-the-napkin estimate by Joseph Esuchanko, the city's actuary.
Though this savings would represent less than 2 percent of the city's $43 million midyear budget deficit, it would be equivalent of saving several libraries or recreation centers that Mayor Jerry Sanders has proposed closing to close the budget gap...
However, the pension board, made up of a mixture of current and former city employees and mayoral appointments, has consistently shot down proposals to lower the interest rate. The board is scheduled Friday to consider lowering it to 7.75 percent.
In 2005, the city ended the Deferred Retirement Option Program, or DROP, for new employees. And both Sanders and City Attorney Michael Aguirre have tried unsuccessfully to eliminate the program altogether.
The program allows employees with five or fewer years left until retirement to keep working and collect a monthly pension payment based on their salary and years of service at the time they enter the program. The pension money is deposited into an account controlled by the pension system, which pays an 8 percent return no matter what is happening in the financial markets.
In exchange, employees freeze the salary that their pension calculation is based on the moment they enter DROP...
On Oct. 31, the pension deficit stood at $2.78 billion -- more than double what it was a year ago, according to Esuchanko...