now to the west coast. a controversial new plan for a california city with big money problems. right now san jose cannot pay the benefits it owes city workers. so what s the new plan? why are some people trying to stop it? grif jenkins hit the ground in san jose. greta, no one here is san jose, the capital of silicon valley, ever expected the kind of financial struggles that the city has been plagued with for the last few years. the harsh reality is they face a $3 billion unfunded pension liability and no money to pay for it. it has many people asking the question, are they the next detroit? we re a long ways from becoming the next detroit because we ve taken action the last couple of years, some drastic action. we cut our employees pay by 10%. we had to lay off a bunch of people and shrunk the work force, and that s giving us a cushion. how did we get here? well, you know, a lot of it is traced back to increases in the benefits that came in the
late 1990s at the statewide level. that, in turn, set in motion a situation where unions up and down the state were pushing their own city councils to match those benefits. then the investment returns that were supposed to make those benefits free didn t materialize. now you have multi-billion dollar liabilities that somebody has to pay for. you ve got roughly $3 billion in unfunded pension liability. don t have the money to pay for it. if you can do anything and everything you wanted, what s the plan? first and foremost, you have to deal with the fact that costs are extremely high. the benefits that we are locked into are too expensive. we can t afford them, and employees can t afford them. so you have to deal with the costs of the benefits, and that s what we ve done with our development to improve by nearly 70% of our voters. we set up a new level of benefits for new employees, and we re making our current
now to the west coast. a controversial new plan for a california city with big money problems. right now san jose cannot pay the benefits it owes city workers. so what s the new plan? why are some people trying to stop it? grif jenkins hit the ground in san jose. greta, no one here is san jose, the capital of silicon valley, ever expected the kind of financial struggles that the city has been plagued with for the last few years. the harsh reality is they face a $3 billion unfunded pension liability and no money to pay for it. it has many people asking the question, are they the next detroit? we re a long ways from becoming the next detroit because we ve taken action the last couple of years, some drastic action. we cut our employees pay by 10%. we had to lay off a bunch of people and shrunk the work force, and that s giving us a cushion. how did we get here? well, you know, a lot of it is traced back to increases in the benefits that came in the
required pension contributions last year. only nine. those are the states that have set aside less than 60% of the required pension contributions. $3.5 billion, detroit city manager kevyn orr estimates that s how much of the city s pension liability are unfunded making it a fifth of the city s debt. 36%, that s how much of its pension obligations the city of chicago funded last year. $1 trillion and possibly more is how much u.s., state and municipal are underfunded. the pension problem is very real. coming up, why you should be concerned even if you are decades away from retirement. cae and man, you know how that feels. copd includes emphysema and chronic bronchitis. spiriva is a once-daily inhaled copd maintenance treatment that helps open my obstructed airways for a full 24 hours. you know, spiriva helps me breathe easier.
exercise is in many cases for the on years, we ve ignored the facts. and the retirees, i empathize with them. can you possibly make good on all those commitments, major retirees? let me put it in perspective for you. one of the things that bankruptcy does allow is a positive in the sense that we were talking with a lot of creditors. but one of the issues that weren t being represented well enough were the retirees. so proactively in the bankruptcy petition, one thing that we re asking for is the judge, right up front, to appoint someone to represent the retirees. they need to be at the table. they need to have a voice. and the other thing i want to really speak to the retirees themselves now is to the degree the pension plans are funded, that doesn t affect us at all. the bankruptcy is about the unfunded portion of the pension liability, which is still significant. i don t want to underestimate it, but the funded piece is safe. the real question is how do you address the unfunded p