Budget and Pension Reform
"City employee compensation should be no better, and no worse, than what is available to other employees in San Diego." - Carl DeMaio
Close the unsustainable pension system and implement 401(k)-style retirement plans.
In past years, the city created pension obligations to city employees that are unsustainable and that threaten our city's capacity to fund essential services. Our city's pension obligations are eating up a greater and greater percentage of the city budget, and if nothing is done, pension costs will continue to climb and approach almost $500 million by 2024.
Carl proposes offering current city employees the option to "opt out" of the city's pension system and "opt in" to a 401(k)-type individual retirement account. He also proposes to transition out of the pension city pension system by offering all new city employees individual retirement accounts.
End pension "spiking" and cap "pensionable pay."
Carl has proposed specific reforms that will end pension "spiking" by excluding supplemental payouts from being calculated into long-term pension formulas. Presently, some city employees receive "add-ons" and "specialty pays" on top of their base salary. These extra pay amounts are then used in addition to base salary when calculating lifelong pension benefits. Reforming pensionable pay in this manner can save taxpayers up to $250 million in five years alone.
Reform the double-dipping pension programs.
On top of the overly generous pension benefits that city employees receive, city employees have the option to draw even higher retirement payouts at the taxpayers' expense. The opportunities for double dipping must end, as a matter of both fairness to the San Diego taxpayers who could never imagine such generous benefits through their own jobs, and as a matter of financial common sense at a time when the city must make choices to resolve the budget deficit.
Carl proposes eliminating the Supplemental Pension Savings Program (SPSP), through which taxpayers now provide a 3% match to an employee's 401(k). He also proposes eliminating the Deferred Retirement Option Plan (DROP), which will cost the city approximately $150 million over the life of the program by allowing city employees to retain their salaried jobs while concurrently drawing their retirement payouts.
Require city employees to pay their full and fair share of the cost of their pension benefits.
Carl believes that city employees should share the cost of their retirement benefits with the taxpayers. This means splitting the contribution into the pension system equally with the city. The City Charter expressly requires employee payments be "substantially equal" to the payments that the city makes into the system with tax dollars. Carl proposes ending the city's practice of providing "offsets" to the employee contributions, which increase the city's costs.
Conduct performance audits to examine department operating procedures.
The city has finally adopted one of Carl's reforms that calls for the City Auditor to conduct performance audits of city departments. Upon taking office, Carl established the goal of conducting performance audits on at least 50% of city budgeted expenditures by 2013. Performance Audits examine how well each city department is operating, and suggest ideas for improvement. As the performance audits are conducted, the Mayor and City Council should commit to implementing cost-saving ideas as fast as possible.
Hold department heads responsible for meeting performance measures.
Carl proposes requiring every city department to submit a strategic plan, with specific, measurable and accountable performance goals and measures for evaluating results. Performance measures should relate to improved efficiency, timeliness, quality, or other operational improvements in delivering the department's services. In order to ensure that every department meets the performance measure and goals specified in the department's strategic plan, Carl proposes requiring the head of each department to sign an annual "performance contract" that holds the department head accountable for meeting those performance goals and measures.
Fulfill the voters' mandate by fully implementing managed competition.
In 2006, the voters of San Diego overwhelmingly passed the ballot measure that Carl helped craft, Proposition C, requiring the city to allow private service providers a fair chance to compete with city employees for city contracts.
Carl has identified over $20 million in annual savings to the city through contracting with private service providers to manage various maintenance and operations functions. The city has still not provided sufficient opportunity for private service providers to compete with city employees for contracts, and it must take action to implement the will of the voters.
Consolidate duplicative departments and cut waste in all city departments.
The city has bloated bureaucracies. Even good city employees are stifled by complex processes and old ways of doing business. We must fundamentally rethink how our city government operates, and work toward delivering services faster, better, and less expensively. Consolidation of offices will eliminate government waste and help the city delivery services more efficiently and effectively.
As an example, Carl proposes consolidating into a new Office of Management and Budget (OMB) the existing functions of budget and performance management, financial management, human resources and labor relations, information technology, and contracting and competitive sourcing, which are presently scattered across multiple offices.
Adopt performance budgeting for the City of San Diego.
Carl has for years been a leader on showing governments at all levels how to adopt performance-based budgeting practices. Carl strongly believes that the City of San Diego should adopt performance-based budgeting to improve city operations and make our city run more efficiently and cost effectively. "Performance budgeting" would bring transparency to the cost-per-unit of providing city services and give city departments the flexibility to manage resources through the fiscal year, provided that specified performance results are met.
Expand the use of technology in city operations and eliminate unnecessary bureaucracy
Carl proposes that the city eliminate unnecessary bureaucracy by thinning the multiple layers of management that exist in city departments. There are numerous opportunities for the city to eliminate unnecessary bureaucracy and achieve budgetary savings through greater utilization of technology. Carl has identified a number of areas where technology could be used to deliver services more effectively and inexpensively.
