City Manager Fires Back on Pension Projections

Internal emails and memos were sent to city employees after an NBC Bay Area Investigation

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    NEWSLETTERS

    The City of San Jose is pushing back after an NBC Bay Area investigation revealed some officials haven't been straight forward when it comes to future retirement costs. But is what they are saying true? This story was published Feb 10, 2012 at 6:44 p.m. (Published Thursday, Apr 26, 2012)

    More fallout today after an NBC Bay Area Investigation revealed some San Jose officials have not been straightforward when it comes to future retirement costs.

    Unions have filed an ethics complaint against Mayor Chuck Reed, Retirement Services Director, Russell Crosby and former city actuary Michael Moehle.

    Guessing Pensions

    [BAY] Guessing Pensions
    Internal emails and documents show some fuzzy math behind pension cost projections used to sell a fiscal disaster in San Jose. This story was published Feb. 9, 2012 at 12:06 a.m. (Published Thursday, Apr 26, 2012)

    Now the city is firing back. An internal email was sent to city employees after our investigation aired, calling our report, "misleading." This memo was also sent yesterday to the city council.

    It says the city never used the figure $650 million to make official decisions. That number is a quarter billion dollars higher than the city's official projection.

    Unions Call for Pension Investigation

    [BAY] Unions Call for Pension Investigation
    Five city unions have filed a formal ethics complaint against high-ranking San Jose officials, including Mayor Chuck Reed. Part of a continuing series led by NBC Bay Area's Jenna Susko. This story was published Feb. 10, 2012 at 3:20 p.m. (Published Thursday, Apr 26, 2012)

    The City Manager cites multiple dates of press releases and city memos where they use $400 million or $431 million as the 5-year-projection for retirement costs.

    What they left out: multiple press releases from the mayor  and memos last spring- in April, May and June. Each one warning you costs could reach $650 million by 2015-2016.

    In this press release from May 13,2011, the mayor calls for a fiscal emergency, saying in 5 years "retirement costs could jump to $650 million if assumptions are adjusted to reflect modern conditions." But it wasn't just in press releases.

    The mayor used the figure $650 million in his June budget message (seen on page 3), in this Sacramento Bee editorial, authored by the mayor, in a presentation at Stanford and in this November article seen in Vanity Fair Magazine. "It was a number off the top of my head," Retirement Services Director, Russell Crosby tells NBC Bay Area.

    Crosby said $650 million could be a 5-year projection once in a meeting last year.

    Crosby told us, his estimate was wrong. "The mayor was told not to use that number that the correct number was 400," Crosby tells NBC Bay Area.

    "Why would you use that number instead of the number that actuaries provided?" Watchdog Reporter, Jenna Susko asks the mayor, "They said 400."

    "We used both numbers," the mayor responded.

    "That number was used when calling for a fiscal emergency. That number was used in the public. That number was used to say we need pension reform," Susko says to the mayor.

    "We do need pension reform and that number was part of the discussion," the mayor says.

    A number the city says was never used to make decisions, but it was fed to the public and it's the public that ultimately decides on pension reform at the ballot box.

    So what's next? An outside law firm is evaluating the ethics complaint filed against Mayor Chuck Reed, Retirement Services Director, Russell Crosby and former city actuary Michael Moehle.

    The law firm will determine if the complaint warrants an investigation, which would then take the city’s elections commission up to a month to complete.

    Do you have a story for us to investigate?  Contact: TheUnit@NBCBayArea.com