By David Garrick
The San Diego Union-Tribune
SAN DIEGO — San Diego took another step Friday toward ending the long and costly legal battle over 2012’s Proposition B, a voter-approved attempt to eliminate pensions for most new city workers that was later overturned by the courts.
The city’s pension board voted Friday to require San Diego to pay $7.5 million to provide more generous pensions to roughly 1,000 police officers hired since Proposition B.
| POLICE1 NEW RESOURCE: How to fund drone as first responder programs
This is the fourth group of workers the city has had to compensate since Proposition B’s reversal because officials put the measure on the ballot without negotiating the details with affected labor unions, as required under state law.
Friday’s agreement brings the city’s total payout to unwind Proposition B to $203 million, with at least one more payout expected.
While police officers were the only workers exempt from Proposition B’s elimination of pensions for new hires, the ballot measure made pensions for newly hired police officers less generous than they were before the measure.
The measure reduced the maximum pension for a city police officer from 90% of a retiree’s top salary to 80% of their top salary.
In addition, it required the top salary to be calculated using an average of the officer’s three most highly paid consecutive years. Before, the three years used in the calculation did not have to be consecutive.
The city’s pension system, the San Diego City Employees Retirement System, has calculated the cost of giving affected officers the more generous pensions they would have gotten before Proposition B at $7.5 million.
That includes $1 million to cover the difference between the pension contributions that affected officers have actually been making and the larger pension contributions they should have been making.
The city owes another $900,000 to cover the higher contributions the city should have been making on behalf of these officers. And the city owes another $5.5 million to cover what the pension system estimates more generous pensions for these officers will ultimately cost.
The pension board voted 10-0 Friday to require the city to pay the $1.9 million in contribution costs up front in one lump-sum payment on July 1, 2026, as part of the city’s annual pension payment.
The city’s payment — which was a record $533 million for the new fiscal year that began July 1 — is now slated to be $540.1 million during the fiscal year that begins next July.
Friday’s pension board vote also requires the city to slowly pay the $5.5 million in higher long-term pension costs over the next 20 years. Instead of requiring up-front payment, the board is adding the $5.5 million to the city’s $3.5 billion pension debt.
Pension system officials said the new increase in debt won’t delay the city’s projected payoff date for that debt beyond the current 2044, but they said payments will be slightly higher before then.
The city and pension board have followed the same procedures with three previous groups of workers affected by Proposition B, requiring contribution costs up-front and allowing estimated higher pension costs to be amortized over 20 years.
The city paid $193.3 million in 2023 to create pensions for two groups of workers.
One group included more than 3,000 workers hired after Proposition B took effect in July 2012 and who were still working for the city when pensions were restored in July 2021. They are called Phase 2 workers.
The second group was 705 workers hired after the city agreed to restore pensions but before officials had worked out exactly how that would happen and what it would cost. They are called Phase 1 workers.
The city also spent $2.2 million creating pensions for another group called Phase 3 workers. That group included 204 people who were hired after Proposition B took effect in July 2012 but were no longer working for the city by the time pensions were restored in July 2021 .
Friday’s agreement doesn’t conclude things for the roughly 1,000 police officers hired since Proposition B.
That same group is still engaged in litigation against the city over being denied pension credit for six months they spent in the police academy.
The San Diego Police Officers Association, a labor union that represents city officers, says it would cost the city about $11 million to solve that dispute.
The dispute stems from a last-minute decision by the authors of Proposition B to exempt police officers from the measure.
But when that change was written into the Proposition B language, it applied only to “sworn” officers, which doesn’t include police recruits who serve six months in the police academy before becoming full-fledged “sworn” officers.
In its lawsuit, the police union argues that these officers should get pension credit for those six months, which could boost the pensions they get when they retire.
Union president Jared Wilson said Friday that he’s pleased the city keeps moving toward unwinding Proposition B.
“While we are glad that a significant portion of it has been resolved, we remain in litigation to make our members whole for the harm caused while it was in effect,” Wilson said.
He also called the measure one of “the costliest blunders in the history of this city” and blamed it for the city’s continuing struggles to hire enough police officers.
—
©2025 The San Diego Union-Tribune. Visit sandiegouniontribune.com. Distributed by Tribune Content Agency, LLC.