PERB Invalidiates San Diego’s Attempt to Bypass Bargaining Over Pensions by Voter Initiative

On December 29, 2015, the Public Employment Relations Board (PERB)ruled in City of SanDiego (2015) PERB Decision No. 2464-M, that the City violated the Meyers-Milias-Brown Act by slashing its plans through ballot initiative rather than bargaining. The three-member Board panel was unanimous in its decision, and ordered the City pay back employees for lost benefits plus interest. The City Attorney has already announced his intent to appeal the decision to the courts, since the value of the benefits the City stripped from its employees is likely in the hundreds of millions.

In 2010, then-Mayor Jerry Sanders began campaigning to “reform” employee pensions. This included a proposal to get rid of City employee pensions and replace them with much cheaper 401(k)-style benefits. In 2011, Sanders and his political allies created the Comprehensive Pension Reform Initiative, later known to City voters as Prop B. Though the Mayor is the Chief Executive of the City—and therefore the chief negotiator for the City in bargaining with employee unions—Sanders did not present his plan as a bargaining proposal to unions, and refused to negotiate when asked. 

The MMBA requires local agencies to meet and confer in good faith with employee organizations over wages, hours, and other terms and conditions of employment. Retirement benefits are unquestionably part of that duty to bargain. Under Seal Beach, public entities have long been required to satisfy bargaining obligations prior to seeking charter changes to employee compensation.  The courts and PERB recognized that if employers could bypass bargaining through legislative or voter enactments, the MMBA could be easily circumvented.  Thus, public entities must bargain over charter changes they wish to submit to a public vote if they impact compensation.

The City attempted to avoid its legal requirements under Seal Beach by miscasting the Mayor's Prop B as the action of private citizens, not public officials, and therefore argued it did not have to bargain with the unions. Sanders himself claimed during the campaign and in the PERB hearing that he was acting as a private citizen, not as the Mayor. PERB saw through the ruse, due to overwhelming testimony proving that Sanders worked on the proposal extensively in his capacity as Mayor, included his staff in the process, and made the Council aware of his intent. This was just a scheme to get around the City’s duty to bargain.

Though the fight isn’t quite over, PERB's ruling vindicates the long standing holding of Seal Beach and represents an important win for public sector collective bargaining rights in California.  PERB’s decision will likely next be heard by the Fourth District Court of Appeal.