California's state auditor said in a report Tuesday that San Jose officials provided "inadequately supported" estimates in bond documents that said its retirement costs would increase to $400 million by fiscal 2016.
The audit report found that three bond statements in 2011 were unsupported by acceptable actuarial methodologies.
It also said that another projection that the city's annual retirement costs could increase to $650 million by fiscal 2016 was unsupported and likely overstated.
The boards for the city's two retirement systems projected the city's contribution to the plans for fiscal 2016 would be $320 million, according to the auditor.
The auditor found that police and fire retirement benefits from fiscal 2010 to 2012 increased general fund public safety costs even though full-time positions declined by 382.
The report urged the city to report the official retirement cost projections using assumptions backed by the two retirement plan boards or make estimates based on accepted actuarial methodologies.
San Jose officials agreed with the recommendation, according to the auditor, but disagreed with some of its conclusions. The city has come under fire from union employees for allegedly exaggerating retirement costs ahead of an election in June that saw voters approve changes to the city's pension system to reduce costs.
Three labor unions in San Jose filed a complaint with the Securities and Exchange Commission in February charging that the mayor made public estimates of pension costs that were significantly higher than the projections in bond documents.
The complaint charged that Mayor Chuck Reed told numerous media outlets that the city's pension costs could reach $650 million by 2016 ahead of the election.
But city bond documents for $315 million of airport hotel tax revenue bonds issued in 2011 said pension contributions would rise to $431 million by 2016
