California voters continue weighing-in on pension reform, approving 20 of the last 22 measures put before them. It’s a trend that demonstrates the public’s interest in pension reform and is mirrored by more than 240 local governments addressing pension reform in city halls instead of ballot boxes.
The latest reform measures to be approved came in Tuesday’s primary election, where nearly 70% of voters in San Jose approved Measure B. Many consider that measure as testing the limits of legal pension reform. While many municipalities are creating a “second tier” pension system for new hires, San Jose’s newly approved reform would impact how current retirees earn benefits.
While a similar approach was taken by Orange County, and led to a protracted legal battle, the San Jose measure will not reduce benefits already earned, simply will reduce the rate at which current employees accrue future benefits. It’s a change that Mayor Chuck Reed told PublicCEO in a previous interview was possible due to powers granted to the city in its charter. He specifically pointed to Section XV:
“…the Council may at any time, or from time to time, amend or otherwise change any retirement plan or plans or adopt or establish a new or different plan or plans for all or any officers or employees.”
Opponents of the measure say that kind of reform is not only illegal, but all pension reform should be left to the negotiation table, not the ballot box.
According to a report in the San Jose Mercury News, San Jose POA President Jim Unland said that Measure B violates employees’ “vested rights.” They also quoted him as saying, “The days of trying to work with these folks are over. … We’ll see you in court.”
The only two pension reform measures to fail in the last two years were both in San Francisco. In November of 2010, voters rejected a plan that would have increased employee contribution rates to their pension plans. In November 2011, a similar measure was placed on the ballot, which also failed – a plan crafted by future Mayor Ed Lee was approved in that election.
Some of the reforms that have been approved have been limiting the power of local government officials to increase benefits.
Measure M, a November 2010 initiative in Riverside County, made it so that supervisors are no longer allowed to increase benefits. That is an authority reserved for a popular vote. They are allowed, however, to reduce benefits. Similar provisions appeared in San Jose’s Measure B, where pension increases would need to be approved by the voters.
In Costa Mesa, a November initiative to establish a city charter includes a provision that requires “the majority approval of qualified voters of the City at a general municipal election” in order to increase “any employee, legislative officer or elected official’s existing retirement benefits, other post-employment benefits, or employer contributions, with the exception of Cost of Living Adjustments.”
San Diego’s approach to pension reform is unlike nearly any city in the state. Their new pension system will operate on as a 401(k) plan for nearly all employees. Only police officers will continue to receive a defined-benefit plan.