SAN JOSE (CBS SF) — In the latest salvo in a battle over San Jose employee pension reform plans, a lawyer for three unions has filed a complaint against Mayor Chuck Reed and the city with the U.S. Securities and Exchange Commission.
The complaint was filed Monday by Christopher Platten, a lawyer for the San Jose Police Officers’ Association, San Jose Firefighters Local 230, and the International Federation of Professional and Technical Engineers Local 21.
It alleges that documents for the sales of two city revenue bond series in 2011 failed to disclose that Reed has estimated that pensions could cost San Jose up to $650 million per year in the 2015-2016 fiscal year.
The complaint asks the federal agency to investigate the alleged failure to disclose and “take appropriate remedial action.”
Tom Saggau, a consultant for the unions, said the union members believe the actual cost of funding pensions in 2015-16 will be much lower—$308 million.
But he said that because Reed has “vigorously” voiced the worst-case $650 million estimate in advocating pension reform, he should be held to his words.
“Did he deceive the public or did he deceive potential bondholders? He can’t have it both ways,” Saggau said.
Reed said in a statement, “This is yet another bogus complaint, full of misrepresentations, which was filed by the union lawyers as a political trick to distract the voters from the fact that our city’s retirement costs have tripled in the last decade to $245 million per year.”
In recent statements, Reed has said the city currently estimates that annual pension costs will increase from the present $245 million to $400 million by 2015-16, and that $650 million is a “ballpark number” for the worst-case scenario if actuarial assumptions change.
Reed spokeswoman Michelle McGurk said the SEC complaint appeared to be aimed at a March 6 City Council meeting at which the council is slated to decide on the final terms of a proposed pension reform measure on the June ballot.
Unions and city officials have been negotiating on those terms, but have thus far failed to reach an agreement.
“There’s been a campaign going on to get the council not to put the measure on the ballot,” McGurk said.
Saggau said a hope of influencing the March 6 council vote is “absolutely” a purpose of the filing of the SEC complaint, in addition to the aim of seeking an SEC investigation.
“We’re hoping that the city council will be influenced by the real number, the $308 million (projection),” Saggau said.
“At the end of the day, we want a negotiated settlement on pension reform,” he said.
Florence Harmon, an SEC spokeswoman in Washington, D.C., declined to comment on the complaint. She said that if the agency decides to undertake a probe, “We don’t confirm or deny an investigation.”
The agency’s website said the SEC’s staff investigates complaints privately. If the staff decides that action is needed, it then can seek the commission’s approval for either a civil lawsuit or an administrative proceeding.
(Copyright 2012 by CBS San Francisco and Bay City News Service. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.)