All ballot initiatives must be submitted to the Office of
the Attorney General prior to being placed on the ballot. The Office of the
Attorney General creates a title and summary of the initiative to appear on the
actual ballot.
The title the Office of the Attorney General gave Reed's initiative is "Public Employees.
Pension and Retiree Healthcare Benefits. Initiative and Constitutional
Amendment." The summary aptly states the initiative, "[e]liminates
constitutional protections for vested pension and retiree healthcare benefits
for current public employees." This language demonstrates how drastic this
reform is and how it will prejudice California's public employees. The summary also
notes the long term effects of the initiative are unknown and "depend
heavily on future decisions made by voters, governmental employers, and the
courts."
Mastagni Holstedt, APC has used the Contracts
Clause in California’s Constitution to protect vested employee benefits in
several high profile court battles: Stockton (fiscal emergency declaration
does not authorize City to renegotiate a closed labor contract), Los Angeles
(fiscal emergency declaration does not permit freezing retiree medical benefits
or imposing furloughs), Pacific Grove (Ballot measure capping PERS pension
contributions unconstitutional). Similar rulings were obtained by the
police and fire unions in San Jose invalidating in substantial measure Reed’s
San Jose pension impairments.
This pension "reform" effort is led by Democrat
Chuck Reed and his lawyers. As we blogged previously, the initiative
amends the California Constitution to allow voters to impair employment
contracts. While Reed claims his measure will not impair
current employees' pensions, even Daniel Borenstein of the Contra Costa Times has acknowledged "the initiative would amend the state Constitution to give voters
the right through an initiative or referendum to reduce the future pension
accrual rate for current employees…Reed and DeMaio should be honest about it,
or abandon the measure."
Additionally, the Constitutional amendment would abolish
pensions for employees hired after January 1, 2019 and replace them with a
"defined-contribution" system unless changes to benefits are approved
in an election. In a defined-contribution system, employees have to pay
in a fixed amount with no guarantee of what their retirement income would be.
As a result, this approach shifts the risk and could prevent thousands
of public employees from retiring.
The proposal is not limited to retirement benefits. It
provides, "Voters have the right to use the power of initiative or
referendum... to determine the amount of and manner in which compensation and
retirement benefits are provided to employees of a government employer."
As a result, the Constitutional Amendment would likely be used to pursue
local voter initiatives to bypass collective bargaining to reduce public safety
compensation or due process rights.
The proposal also seriously jeopardizes death and
disability benefits for public safety employees. The new
proposal states it shall not be “interpreted to modify or limit any disability
benefits provided for government employees or death benefits for families.” But
death and disability benefits are often an integral part of a pension plan. As noted by the Legislative Analyst's Office, death and disability benefits are usually prefunded through a pension plan's normal cost. If voters can modify, or even eliminate, pensions for public employees, this necessarily means the funding for death and disability benefits will be cut. The measure does not provide any means of securing those benefits.
The proposal also seeks to insulate future measures from
legal challenge by eliminating the jurisdiction of the Public Employment
Relations Board to hear unfair practice charges regarding future measures
which impair vested rights or collective bargaining agreements.
Now that the initiative has a summary, the proponents must
furnish the required number of signatures in order to make the November 2016
ballot. You can help stop this initiative by educating your family, friends,
and community members about the drastic and detrimental effects of this
initiative and encourage them not to sign any petition supporting the
initiative. You can help stop future attempts to impair retirement benefits by opposing all candidates who endorse this imitative.
