by Marge Ann Jameson
Pacific Grove’s mayor, Bill Kampe, and four other mayors (Chuck Reed of San Jose, Pat Morris of San Bernardino, Miguel Pulido of Santa Ana and Tom Tait of Anaheim) have submitted a ballot initiative for statewide pension reform to the Attorney General of the State of California and asked that she consider it as soon as possible.
The mayors agree that retirement costs are endangering cities’ ability to meet funding for essential public services and are pushing the municipalities ever closer to insolvency. One of the five cities, San Bernardino, has, in fact, filed for bankruptcy. “Pension costs have crowded out library hours, overdue street and infrastructure maintenance, and other important services,” said Kampe in a letter to the State Attorney General.
The initiative, dubbed The Pension Reform Act of 2014, would amend the California state constitution to give government agencies “clear authority” to negotiate changes to existing employees’ pension or retiree healthcare benefits on a strictly going-forward basis, while explicitly protecting retirement benefits government employees have already earned. That is not currently the situation in California, where judicial decisions have made it difficult to make any changes to retirement benefits for existing employees.
“Our Pacific Grove pension action plan has always identified a critical need for state level action,” said Mayor Kampe,” echoing the recommendations of one of the city’s consultants on the issue, attorney Karel Denniston. “I had been in touch with Mayor Chuck Reed of San Jose for several months. He has long been a leading advocate of the need for reform.”
The initiative allows for changes in pension accrual rates on a going-forward basis. It explicitly recognizes that what employees have earned for prior service is protected. And it emphasizes negotiation, at the expiration of existing contracts, is the basis for change.
“I feel it is a well written initiative,” Kampe added.
The state initiative is very different from the PG citizen’s initiatives, both the 2010 initiative (which sought to limit City payments to CalPERS to 10 percent of employee salaries in new contracts), an attempt which flew in the face of the requirements of state law; and the 2013 initiative which attempted to void the 3%@50 pension contract, inviting even more expensive lawsuits.
While other cities were able to enact a two-tier contract, Pacific Grove’s hands were tied by the 2010 initiative in a “damned if you do, damned it you don’t” situation. The 2013 Pacific Grove citizens’ initiative would have presumed that a 3%@50 contract, such as the one under which many Pacific Grove public safety employees are working – and which was enacted in 2002 – is void from its beginning. It would have stripped employees and retirees of benefits they have earned since it enactment.
The council voted in 2013 to ask a court for a ruling on Pacific Grove’s citizens initiative, feeling that it is a judicial question and not appropriate for a petition, especially one like the 2013 version, which the city council, the city attorney, and four different experts agree is deeply flawed. A hearing, originally set for this month, has been delayed until January, 2014.
The Pension Reform Act of 2014 includes other provisions. It would prevent the State of California, pension plan administrators, and other government boards from interfering with elected leaders’ or voters’ ability to amend their public employee retirement benefits for employee’s future years of service. It would protect existing collective bargaining agreements by requiring government employers to wait until current labor contracts expire before negotiating changes to retirement benefits.
Also under statewide pension reform, an additional provision of the statewide initiative is that a city with problematically underfunded plans would be required to develop and implement a stabilization plan. The threshold for requiring a stabilization plan is 80 percent. “The 300 cities in our CalPERS pool are only a few percentage points above that threshold. The initiative will give cities more flexibility for managing retirement benefits and costs.” Kampe said.
The full text of the initiative can be found at www.reformpensions2014.com
