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At an AEI event on Tuesday, Carl DeMaio, former member of the San Diego City Council, kicked off the new phase of his career aimed at bringing national attention to the problem of poor pension funding. DeMaio believes the "pension tsunami" is becoming increasingly problematic, but has yet to gain sufficient public awareness.
DeMaio laid out the challenges that most state and local governments face, including common abuses such as spiking, double dipping, and accounting gimmicks. He provided the outrageous example of the current system allowing a librarian to retire with a six-figure annual pension. Under DeMaio's leadership, San Diego enacted the Pension Reform Initiative, which transferred the city's employees to a privatized 401(k) retirement plan and addressed many of these issues.
In this vein, he proposed measures that Congress could take to fix pension systems nationwide, such as requirements for financial disclosure and elimination of conflict of interest on pension boards. Overall, DeMaio believes reform is a step-by-step process since "politicians don't see the light until they feel the heat."
Across America, state and local governments are wrestling with the rising costs of public employee pensions, which have cut into funding for police, fire, education, and other public services. The most ambitious public pension reforms have occurred in San Diego.
The Comprehensive Pension Reform Initiative, passed in June 2012, shifted newly hired San Diego city employees into 401(k)-type pensions that are benchmarked against private-sector plans, while reforming abuses such as “pension spiking” and ensuring that public employees pay an equal share of the costs of their pensions. Total savings from the initiative will reach $1 to $2 billion over the next 20 years.
This event will feature a presentation from Carl DeMaio, who — as a member of the San Diego City Council — championed the pension initiative and now seeks to apply its lessons nationwide.
If you are unable to attend, we welcome you to watch the event live on this page. Full video will be posted within 24 hours.
Registration and Breakfast
Carl DeMaio, California Reform Council, Reason Foundation
Andrew G. Biggs, AEI
For more information, please contact Veronika Polakova at [email protected], 202.862.4880.
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Andrew G. Biggs is a resident scholar at AEI. Biggs was the principal deputy commissioner of the US Social Security Administration in 2007, where he oversaw the agency’s policy-research efforts and led its participation in the Social Security Trustees working group. He worked on Social Security reform at the National Economic Council in 2005, and was on the staff of the President’s Commission to Strengthen Social Security in 2001.
Carl DeMaio is the chairman of the California Reform Council at the Reason Foundation and the leader of the grassroots advocacy group Reform San Diego. After a career of helping turn around financially troubled entities, DeMaio has become a nationally recognized leader in the effort to reform federal, state, and local government finances. DeMaio helped shape the President’s Management Agenda at the federal level, and has been a thought leader in the fields of performance measurement, performance-based budgeting, process improvement, public-private partnerships, contracting and outsourcing government functions, and pension reform. DeMaio served on the San Diego City Council from 2008 to 2012, and narrowly lost the race for mayor in November 2012. He has been widely credited with helping turn around the City of San Diego. DeMaio’s work began in a “watchdog” role as he helped uncover San Diego’s fiscal crisis, draconian service cuts, crumbling roads and infrastructure, and inaction on the part of city leaders. He subsequently stepped forward with a comprehensive reform agenda to fix the city’s problems. In 2012, DeMaio crafted and led a citizens’ campaign to qualify and pass the Comprehensive Pension Reform Initiative — the first-of-its kind measure to switch San Diego from a Defined Benefit Pension Plan to a 401(k) retirement program. DeMaio’s measure also figured out how to legally reform “vested” pension benefits for existing employees by freezing pensionable pay and ending abuses such as pension spiking. DeMaio also founded two successful businesses before the age of 30: the Performance Institute in 2000 and the American Strategic Management Institute in 2003.