SD’s Pension System Fight May Be Unresolved for Years
Majority of media coverage misstates recent ruling
By Sandra G. Leon
A December 29, 2015 ruling by a state labor board says the City of San Diego acted improperly leading up to the passage of 2012’s Proposition B, but the board left the voter-approved measure intact, contrary to most media reports.
The Public Employee Relations Board, referred to as PERB, upheld a February 2013 decision by Administrative Law Judge Donn Ginoza that ruled the City, and in particular, then-Mayor Jerry Sanders, acted improperly in helping write, promote, and campaign for Prop B.
“Based on our review, we conclude that the [Administrative Law Judge]’s findings of fact are supported by the record, and we adopt them as the findings of the Board itself,” the PERB ruling reads.
Media reports since the December 28th ruling have proclaimed that “PERB Smacks Down Prop B”, “State Orders City to Rescind Carl DeMaio’s Prop. B, Offer Pensions Again”, and even “State Labor Agency Orders City to Bring Back Defined Pensions for Employees”. A plain reading of the ruling does not lead to that conclusion.
The PERB ruling states that neither the Administrative Law Judge nor the Public Employees Relations Board have the power to overturn the measure passed by voters. The ruling agreed with Judge Ginoza that the City violated labor law in failing to “meet and confer” and must make new employees hired since the passage of Prop B “whole” by paying them the difference between the pension they have and the value of what they would have had under the old system. The system created by Prop B, which is now part of the City Charter, remains in place.
“Despite media reports to the contrary, PERB’s decision does not overturn Proposition B,” stated Felix de la Torre, General Counsel for the Public Employee Relations Board, in an exclusive interview with La Prensa San Diego this week.
“Instead, PERB ordered the City to pay the affected employees the difference in value between their defined benefit plan and the 401K plan enacted by Proposition B,” Mr. de la Torre explained.
Proposition B created 401k-style pensions for new City employees as a means to cut costs for the City compared to the defined benefit pensions city employees have had for decades. The chief proponent of the measure was then-Councilman Carl DeMaio, who launched his own pension reform efforts even before he was elected to the Council. By 2011, DeMaio, then-Councilman Kevin Faulconer, and then-Mayor Jerry Sanders all agreed to unify their support behind what became Prop B.
The legal issues in this case hinge on then-Mayor Sanders’ campaigning for the measure. Under the San Diego’s “strong mayor” format of government, the Mayor is the City’s chief labor negotiator. It is the Mayor that proposes labor agreements and presents them to the City Council for approval or denial. The Council can’t even modify a labor agreement submitted by the Mayor.
But, in pushing for a comprehensive pension reform he knew labor unions would not accept, Mayor Sanders refused to negotiate with the affected unions in meetings referred to as “meet and confer”. Those meetings are required under state and federal labor laws. According to the unions, Sanders rebuffed three written requests to negotiate.
Instead, Sanders pushed Prop B as the solution to the city’s financial woes. He held press conferences in the Mayor’s office. He touted Prop B in his official State of the City Address in January 2012. His staff worked to promote the measure as a major part of the Mayor’s political agenda to help save the city from bankruptcy.
Voters approved Prop B in June 2012 by a 65% to 35% vote. City officials hailed it as a major victory to move the city forward. Labor unions promised to fight the new two-tier pension system.
The unions’ legal case claims that Sanders, as the City’s chief labor negotiator, was obligated to meet and confer with the employee groups before any changes to pensions could be made. Sanders’ defense has been that he was acting as a “private citizen” in his support of Prop B, and therefore he was not acting in any official capacity for the City and should not have been required to meet and confer.
Judge Ginoza and the recent PERB ruling disagree. Judge Ginoza noted that Sanders operated under the color of authority when he used the Mayor’s office, staff, and official meetings to campaign for Prop B. The PERB supports that conclusion. Sanders has been singled out as the sole reason the City’s new pension system is being challenged.
On January 12th, the City Council voted unanimously to appeal the PERB ruling to the Fourth District Court of Appeal. That same court ruled against the City back in 2012 when the City fought to keep the legal challenge from going before the Public Employees Relations Board in the first place. The Court ruled then that it wanted “the benefit of PERB’s administrative expertise” in this complex matter. The appeal may be heard within 12 to 18 months.
But the Council’s unanimous decision to appeal seems to have two differing agendas at play. The Republican councilmembers seem confident the Court will overturn the PERB decision and keep the new pension system in place.
The Democratic councilmembers believe that only the Courts can properly overturn Prop B’s, and go back to one defined benefits pension system for all employees. Both sides want an appeal but for vastly different reasons.
If the Court, and eventually the California Supreme Court, overturn Prop B, it could be solely because then-Mayor Sanders help pass the measure by using his office and position to influence the outcome. If Prop B is overturned in another year or two, the costs to the City may exceed $100 million to restore the benefits of over 2,000 employees hired since it passed.