‘Enron by the Sea’
Just before Mr. Sanders took office in 2005, the city was rocked by a pension underfunding scheme that led to a Securities and Exchange Commission investigation and caused the city’s credit rating to be suspended.
The New York Times dubbed San Diego “Enron by the Sea.”
Among a series of changes that have become a model for other state and municipal pensions programs, Mr. Sanders previously helped move city workers to a hybrid pension program. Employees hired after July 1, 2009, contribute more toward their retirement savings and bear more investment risk. Those changes will save an estimated $36 million in the next decade, while a recently approved retiree health care plan will save more than $700 million over the next 25 years.
By making the full shift to 401(k)-style plans, Mr. Sanders estimates the city can save at least $1.2 billion over 30 years. So far, several cities and states — including Colorado, Michigan, Ohio, Georgia, Utah, Alaska, West Virginia, and most recently, Rhode Island — have overhauled their retirement systems to include a partial 401(k)-type plan.
Neil Bomberg, a program director at the National League of Cities, said Mr. Sanders‘ push for a fully privatized plan is unusual. Most cities, counties and states with pension problems are moving to some form of hybrid plan similar to the federal employment retirement system, which includes the Thrift Savings Plan that operates like a 401(k).
“We’ve heard a lot of screaming about pensions, but for the most part, they are not bankrupting cities and towns because on average they only amount to 3 [percent] to 4 percent of a city’s annual expenditures,” Mr. Bomberg said.
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Susan Crabtree is an award-winning investigative reporter with more than 15 years of reporting experience in Washington, D.C. Her reporting about bribery, corruption and conflict-of-interest issues on Capitol Hill has led to several FBI and ethics investigations, as well as consequences for members within their caucuses and at the ballot box. Susan can be reached at firstname.lastname@example.org.
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