State Auditor Affirms that San Jose City Officials used “Unsupported” Pension Estimates

Months ago, NBC Bay Area News uncovered how San Jose Mayor Chuck Reed knowingly misrepresented city pension costs and used inflated figures to promote Measure B among local voters, which unlawfully cuts public employees’ benefits.

Following litigation from Local 21 and other city unions challenging Measure B’s legality, the California State Auditor now affirms that San Jose officials used “unsupported” pension estimates: "Although we believe that San Jose's financial challenges are real, we found that some of the retirement cost projections reported in the city's official documents in 2011 were not supported by accepted actuarial methodologies," the state audit said. "It is unclear which retirement cost projection the voters relied on, if any, when they voted for these changes."

Mayor Reed and City Manager Debra Figone have both denied misleading voters and using false figures to convince voters to approve Measure B. They repeatedly stated that the City’s pension costs could reach $650 million by 2015, when estimates showed that projections for 2015 placed the City’s future liability at $400 million. Now, both officials state that the figure they used repeatedly to justify far-reaching and punitive cuts to employees’ benefits “was never official.”

"The mayor's political strategy of overinflating costs proved to be the largest barrier in negotiating legal pension reform with San Jose's employees," said John Mukhar, President of Local 21’s Association of Engineers and Architects chapter in San Jose.

For more information, visit our San Jose’s Illegal Measure B page.