California Mayors Introduce Pension Reform Initiative

Mayors of five California cities have filed papers with the state to place an initiative on next year's ballot that would amend the state's constitution to allow local governments to negotiate changes in pension benefits for current and future employees.

The initiative would allow cities to scale back future pension benefits for current employees through union bargaining or by taking reforms to local voters. The proposal would not allow cities to touch benefits that current employees have already accrued, San Jose Mayor Chuck Reed said Wednesday. A number of cities struggling with skyrocketing pension costs have already sought to lessen their obligations by reducing pension benefits for future hires — but that isn't enough, he said.

"If you're making changes for future hires, the savings are way in the future. It takes years, many years, before the savings get to be significant but the problems are in the present and in the near future," said Reed, who added that San Jose's annual retirement obligations have increased $199 million since 2003. "You have to go where the significant costs are and that's with current employees."

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