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.

Ventura County Pension Initiative Barred from November Ballot

On August 4, 2014, Ventura County Superior Court Judge Kent Kellegrew tentatively decided to issue an injunction barring the initiative to phase out Ventura County's pension system from appearing on the November 2014 ballot. The ruling has significant statewide implications for counties that participate in CERL.

The initiative seeks to withdraw Ventura's participation in the County Employees Retirement Act of 1937. This would put future Ventura County employees into a 401(k)-type retirement savings plan rather than the benefit plan covering current employees. The court held Ventura county cannot 'opt out' or terminate its participation in the Act based on a countywide voter initiative.

When the Legislature enacted the Act, it permitted individual counties to choose to participate. When Ventura County chose to participate in the Act, it agreed to follow the rules established by the Legislature. The Legislature only allows a county to terminate participation in the Act using the procedures set forth in Government Code sections 31564 and 31564.2. These procedures do not allow a county to opt out of the Act using a countywide voter initiative.

The court held allowing this measure to be considered on the November ballot would only result in wasted public resources. Even if the voters adopted the initiative, the measure could not be implemented because the initiative did not comply with Government Code sections 31564 and 31564.2.

In addition, the initiative fails on other grounds. The court held the initiative violates the single subject requirement imposed by the California Constitution.

On Wednesday, August 6, 2014, the Ventura County Taxpayers Association said it will not appeal Judge Kellegrew's August 4 ruling. This ruling marks a significant victory in preserving pension rights for county employees.

The ruling is unique as a pre-election challenge victory. After the superior court denied a pre-election challenge to a retirement-related Menlo Park initiative, most victories, such as those in San Jose and Pacific Grove successfully challenged initiatives after the election. This win helps establish that even highly unusual pre-election challenges can thwart attacks on retirement security.

Court Strikes Down San Jose Mayor Chuck Reed’s Challenge to Attorney General’s Summary of His Pension Reform Act

On March 17, 2014, a Superior Court judge rejected Mayor Chuck Reed’s challenge to the Attorney General’s summary of his “Pension Reform Act of 2014.”  Reed claimed the first sentence of Attorney General Kamala D. Harris’s summary was false, partial, and argumentative.  The Court analyzed the Attorney General’s sentence word-by-word, and found it was not false, misleading, or partial in any way. 

Attorney generals summarize each ballot initiative for voters in 100 words or less.  The summary appears on the initiative petition circulated among voters.  If a minimum number of voters sign the initiative petition, the initiative appears on the ballot.  The summary gives voters a sense of the measure’s purpose without creating prejudice for or against the proposed measure.  Attorney General Kamala D. Harris wrote the title and summary for Reed’s Pension Reform Act.  Reed challenged the first sentence of the summary, which stated:  “Eliminates constitutional protections for vested pension and retiree healthcare benefits for current public employees, including teachers, nurses, and peace officers, for future work performed.” 

First, Reed claimed the word “eliminates” was misleading because the initiative does not repeal or replace any provision of the state Constitution.  The Court agreed the initiative does not eliminate any provision of the state Constitution.  But the summary does not state the initiative eliminates constitutional provisions – the summary states the initiative eliminates constitutional protections.  The Court found the Attorney General’s characterization was accurate. 

Second, Reed argued the phrase “constitutional protections” is false and misleading because the California Rule granting public employees vested pension rights in retirement benefits is not constitutionally based.  The Court replied, “If the California Supreme Court says the California Rule’s protections are constitutionally based, they are.”

Next, Reed ignored California Supreme Court precedent a second time, arguing the word “vested” is false and misleading.  Reed claimed the word “vested” only describes benefits that have already been earned through past service, not benefits earned through future service.  Again, the California Supreme Court has used the term extensively to describe benefits earned through future service.

Finally, Reed challenged the Attorney General identifying “teachers, nurses, and peace officers” as affected public employees.  Reed claimed the Attorney General cherry-picked three very popular job classifications of public employees to discourage voter support.  In fact, those three job classifications make up close to half of all public employees.  The Court found the Attorney General accurately and concisely identified the affected employees for voters.  

The Court's decision marks another blow to Mayor Chuck Reed's initiative, which seeks to eliminate fundamental constitutional protections for California's public employees.