How the model pension initiative (Prop. 201) is faring in California


Posted by AzBlueMeanie:

Yesterday I posted about Tucson and Cincinnati confront the same model pension initiative (Prop. 201): "[T]he ballot language was written by Maurice Thompson of the 1851 Center for Constitutional Law based on measures recently passed in San Diego and San Jose, Calif."

The Los Angeles Times reported in June 2012, 2 big cities OK cuts to worker pension costs:

Landslide victories on ballot measures to cut pension costs in two major
California cities emboldened reform advocates, who said they expect a
flurry of copycat initiatives. . .

In San Jose, nearly 70% of voters Tuesday approved a plan that gives
workers the choice between increasing their pension contribution to 13%
of their pay, currently 5% to 11%, or switching to a lower-cost plan
with reduced benefits. It also steeply cuts benefits for new hires and
tightens rules for disability retirements.

In San Diego, where pension cuts already have been implemented, voters
opted to eliminate pensions for new workers. By a 66% to 34% margin,
voters Tuesday endorsed Proposition B, which provides newly hired city
employees with a 401(k) program, but preserves traditional pensions for
new police officers.

* * *

Local pension measures have enjoyed resounding success at the ballot.
Before Tuesday's vote, 18 measures to alter a pension system had passed,
and only two had failed, both in San Francisco. On average, those
measures passed with 62.7% of the vote, according to the California
Foundation for Fiscal Responsibility, a pension-reform advocacy group.

According to Ballotpedia, San Diego Pension Reform Initiative, Proposition B (June 2012),"About $1.5 million was contributed to the campaign for a "yes" vote on
Proposition B, along with an additional $323,000 in non-monetary
contributions." Only "About $182,000 was contributed to the campaign for a "no" vote on Proposition B." Yeah, that would explain the lopsided win in San Diego.

This ballot measure was spear-headed by Carl DeMaio, a former San Diego
mayoral candidate and City Council member, who has become a
taxpayer watchdog, organizing two
separate reform groups
(one focused on San Diego, one on

Carl DeMaio has become a bit of a star at Dick Cheney's secret underground lair, the American Enterprise Institute. Here are two announcements for an event hosted by the American Enterprise Institute on January 15, 2013, featuring Carl DeMaio. AEI: San Diego Public Pension
Reform Model | Liberty Guide
and San
Diego public pension reforms: A road map for the nation? AEI

Event Description

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.

Things have not gone as swimmingly as the right-wing organizations backing the destruction of public employee pensions would have you believe. As you might imagine, there has been litigation. In February 2013, an administrative law judge ruled against San Diego's Prop B pension measure. What's Next for Prop<. B| Voice of San Diego:

The city is digging in on pension reform, despite a judge’s Monday ruling against Proposition B.

An administrative law judge with the Public Employment Relations
Board wrote the city should reverse actions taken to implement
Proposition B, but the city doesn’t have to follow those orders — at
least for now.

Here’s a primer on the pension measure and the potential impact of this week’s ruling.

* * *

The Public Employment Relations Board,
often called PERB, is state agency that oversees California’s
collective bargaining laws. It’s considered quasi-judicial because it
has a staff of administrative law judges who review potential
violations. Those decisions can be appealed to an outside court.

An administrative law judge who works for PERB ruled that former
Mayor Jerry Sanders should have negotiated with city employees on all
provisions of the initiative before taking it to voters.

Judge Donn Ginoza said in his ruling the mayor, who is considered the
city’s top negotiator in the meet and confer process, denied the unions
their right to lobby for changes.

Sanders and Councilman Kevin Faulconer developed a pension initiative
in the months before the measure went on the ballot. Then-Councilman
Carl DeMaio worked with the San Diego County Taxpayers Association and
the Lincoln Club simultaneously on a separate initiative. The two groups
later agreed on one initiative.

The city has argued that Sanders had a right to work on the
initiative as a private citizen but employee union leaders disagreed.
They said Sanders violated state labor laws by using his office to
promote the initiative and failing to meet and confer with union leaders
before finalizing the measure.

The judge echoed the union’s concerns in his ruling.

You can read the complete ruling here.

The city has 20 days to reply to the ruling and point out areas of disagreement. It can also request a formal hearing.

City Attorney Jan Goldsmith said the city will file the response.

If PERB upholds the judge’s ruling, the case will likely head to the state Courts of Appeal.

Goldsmith expects the case to go before an appellate court, and said
the City Council authorized him to defend Prop. B in June 2012.

* * *

Goldsmith expects a possible appeal to take some time.

“We’re talking years, and in the meantime, unless a court stops us, we’re going to implement Prop. B,” Goldsmith said.

A lawsuit was also filed in San Jose, California. Pension Reform Goes to Court in San Jose – (July 22, 2013):

The pension reforms that San Jose voters overwhelmingly
approved just more than a year ago come to a key test with a trial starting
Monday before a Santa Clara County Superior Court judge.

* * *

[M]uch is riding on the outcome. San Jose's current budget already relies on
$20 million from parts of the Measure B pension reforms. A city win could add
$48 million in yearly savings. Workers, though, want to keep the city from
grabbing even more of their paychecks to pay for their pensions. More broadly,
the judge's ruling will affect similar debates over government pensions
throughout the state and across the country.

"There are a lot of eyes on this case," said Arthur Hartinger, the lead lawyer
representing the city. "The stakes are high."

Added Gregg Adam, a lawyer representing the San Jose Police Officers'
Association, one of several unions suing to block the measure: "It's the opening
round, but opening rounds are important."

* * *

The stakes are huge for Mayor Chuck Reed, who championed the measure, and the
City Council members who supported him. He and many of his council allies
complete their last term in office next year, and a loss in court could sap
political support for the controversial reforms as well as upend the budget.

"If we lose," Reed said, "we'll have to go right back into cutting services."

The case is being argued before Superior Court Judge Patricia M. Lucas. Before
former Gov. Gray Davis appointed her to the court in 2003, Lucas specialized in
litigating high-stakes intellectual property cases and headed the litigation
department for Fenwick & West.

* * *

San Jose's legal road is longer because the city is taking direct aim at the
"vested rights" doctrine. Said Jack Dean, vice president of California Pension
Reform: "all of the state's pension reform activists are watching this case with
great interest."

The San Jose Mercury News reported, Both sides await ruling after San Jose pension trial:

Jose's pension reform is in a judge's hands now after a week of
testimony in a closely watched trial pitting the city's ability to
control ballooning retirement costs against the expectations and rights
of its employees and retirees.

Judge Patricia M. Lucas is expected
to take months to decide the Measure B case, after lawyers submit
written closing arguments, and appeals are likely. But much is riding on
the outcome.

* * *

Not all of Measure B was
at issue, at least in this trial. Unions and retirees weren't
challenging the city's ability to reduce pensions offered to new hires
since its passage. San Jose already has more than 100 new employees
covered by a reduced pension plan, expects to have one in place for
police later this year and is seeking one for firefighters through

Unions also are trying to block Measure B with unfair
labor practice charges through the state Public Employment Relations
Board that argue it violated their bargaining rights.

San Jose Measure B trial

What's at stake:

Jose is seeking some $68 million in annual savings from retirement
reforms related to Measure B. The city already has assumed $20 million
in savings from a few retirement changes: eliminating extra bonus
pension checks and reducing the retiree health plan subsidy.

hope to avoid extra payments toward their pensions. Retirees are
seeking continuation of extra pension checks and higher health plan

The legal argument:

San Jose argues its city charter
reserves the right of voters and their elected officials to make changes
to city retirement plans. San Jose says the city can legally raise
employee retirement contributions and that workers have agreed to them
before. San Jose says its retiree medical benefit is tied to whatever
the lowest-premium plan is offered to employees.

Employees and
retirees argue decades of California court decisions have established
that once an employee is hired that worker has a "vested right" the
retirement plan in place at the time that cannot be reduced.

The decision:

Patricia M. Lucas is not expected to rule for months, after each side
submits written closing arguments. The losing side is likely to appeal
the decision.

More information:

City link to litigation documents:
City link to trial transcripts:

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AZ BlueMeanie
The Blue Meanie is an Arizona citizen who wishes, for professional reasons, to remain anonymous when blogging about politics. Armed with a deep knowledge of the law, politics and public policy, as well as pen filled with all the colors stolen from Pepperland, the Blue Meanie’s mission is to pursue and prosecute the hypocrites, liars, and fools of politics and the media – which, in practical terms, is nearly all of them. Don’t even try to unmask him or he’ll seal you in a music-proof bubble and rendition you to Pepperland for a good face-stomping. Read blog posts by the infamous and prolific AZ Blue Meanie here.