National Attention on San Jose's Pension Struggle

San Jose's plan to avoid Detroit's fate could become a model.

San Jose is not Detroit -- but it has the same problems, and is looking to avoid the same fate.

The "economic tidal wave that has swamped Detroit" is also threatening the capital of Silicon Valley, despite the area's economic prosperity thanks to the tech boom, according to the New York Times.

One-fifth of San Jose's $1.1 billion general fund is spent on pensions, the newspaper reported, which has led to the closure of libraries and cuts in the workforce and to police officers.

San Jose's plan -- approved by voters last year -- to reduce benefits in order to stave off economic doom is being challenged in courts by the unions. But if it works -- in court as well as on the ledger -- it could be a model for other cities to follow, the newspaper reported.

New city employees would get a much-reduced benefits package, while existing workers would get the option of either a similarly-reduced benefits package or the same package -- at a much greater out-of-pocket cost to them.

If it works, San Jose could avoid the bankruptcy filings seen in Stockton and San Bernadino. But if it works, the workers -- who "did nothing wrong" when they accepted generous benefits politicians chose not to fund, in the words of Stanford lecturer and former advisor to Arnold Schwarzenegger David Crane -- will have to bear "brutal" consequences, the newspaper reported.

However, the alternative has been deep cuts to city services across the state. Something has to change -- and the country is watching and waiting to find out what.

Copyright FREEL - NBC Local Media
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