San Diego, California, Proposition B, Changes to Retirement Plans for City Employees Initiative (June 2012)

Proposition B, an initiative to change the retirement plan for new city employees, was on the ballot for voters in San Diego, California, on June 5, 2012. It was approved but then invalidated by a court ruling.

Proposition B was designed to:

• Give new city workers a 401(k) with a city match instead of a guaranteed pension.
• Max out the guaranteed pension for newly-hired public safety workers at 80 percent of an individual’s salary. The cap was previously at 90 percent.
• Cap San Diego's overall payroll for five years at its 2011 level of less than $600 million annually.
• Eliminate the provision requiring a majority vote of all city employees to approve any changes to retirement benefits in the city charter.

Supporters stated that Proposition B would save the city $8.3 million in the first year, $141 million over the initial five years, and nearly $1.6 billion through 2040.

The approval of Proposition B attracted national attention, as did the approval of San Jose Measure B, for their effects on public employee unions.

Aftermath

Lawsuit overview
Issue: Whether Proposition B should be invalidated
Court: San Diego Superior Court
Ruling: Judge Richard Strauss invalidated Proposition B
Plaintiff(s): San Diego City Council and labor unions	Defendant(s): Proposition B proponents

  Source: KPBS and The San Diego Union-Tribune

  

Lawsuit overview
Issue: Whether the involvement of Mayor Jerry Sanders constituted unfair labor practice
Court: California Supreme Court
Ruling: The court ruled in favor of the plaintiffs that the involvement of Mayor Jerry Sanders constituted unfair labor practice. A district court ordered compensation to employees affected by Proposition B, but the initiative was not overturned.
Plaintiff(s): Catherine Boling et. al	Defendant(s): Public Employment Relations Board (City of San Diego)
Plaintiff argument: The involvement of Mayor Jerry Sanders constituted unfair labor practice	Defendant argument: Proposition B was legal and should be implemented

  Source: Justia - Boling v. Public Employment Relations Board

Timeline

• January 5, 2021: San Diego Superior Court Judge Richard Strauss invalidated Proposition B.
• June 10, 2019: The San Diego City Council voted 6-3 along party lines to not defend the validity of the initiative and to seek its invalidation in court.
• March 2019: The U.S. Supreme Court announced it would not review the case involving Proposition B. The California Fourth District Court of Appeal ordered the city to compensate employees who had been affected by Proposition B.
• August 2018: The California Supreme Court ruled that Proposition B was placed on the ballot illegally due to then-Mayor Jerry Sanders' involvement in the campaign for the initiative.
• July 2017: The California Supreme Court voted to review the ruling by the fourth district court that allowed Proposition B to be implemented.
• April 2017: The California Fourth District Court of Appeal ruled that Proposition B could be legally implemented, overturning the ruling of the Public Employment Relations Board.
• December 2015: The Public Employment Relations Board ruled that the involvement of Mayor Jerry Sanders in the Proposition B campaign constituted an unfair labor practice.
• June 2012: Labor union representatives who opposed Proposition B filed lawsuits following the initiative's approval.

San Diego Superior Court Judge Richard Strauss invalidates Proposition B

On January 5, 2021, San Diego Superior Court Judge Richard Strauss ruled in favor of unions and granted the city council's request to invalidate Proposition B. Opponents of Proposition B argued that then-Mayor Jerry Sanders' violated labor laws by backing the initiative without first negotiating with unions. Supporters of Proposition B argued to Strauss that the labor law violations were separate from the initiative and that the court should not invalidate the will of the voters who supported the measure at the ballot because of any labor law violations during the measure's path to the ballot. Strauss said that the labor law violations could not be separated from the initiative: "It’s clear that they were tied together."

Unless appealed, the ruling allows the city to resume offering pension benefits to new city employees. It also allows negotiations over how to treat the approximately 4,000 city employees hired since the approval of Proposition B that were not offered pensions—but rather 401(k)-style retirement plans—according to the measure's requirements.

City council votes to seek invalidation

On June 10, 2019, the San Diego City Council voted six to three along party lines to seek invalidation of the initiative and to not defend it. All six Democrats on the city council voted in favor, and the two Republican members and the one independent member voted against ordering City Attorney Mara Elliott to take action to invalidate the initiative.

District court orders city to compensate employees

After the California Supreme Court ruled in 2018 that Proposition B was placed on the ballot illegally, the California Fourth District Court of Appeal was tasked with formulating a judicial remedy. On March 25, 2019, the district court ruled that the city would be required to compensate employees whose pensions had been replaced following the passage of Proposition B. The city was ordered to pay affected employees the difference between the 401(k)-style system under Proposition B and the original pension system, plus 7 percent interest. While the Municipal Employees Association had requested that the court invalidate Proposition B enitirely, the fourth district declined to do so at the time of the ruling and said that further litigation would be required to overturn Proposition B.

In response to the decision, Ann Smith, an attorney representing the affected unions, said, "The sooner Prop B is invalidated, the better this cost impact will likely be from the city's perspective."

San Diego Mayor Kevin Faulconer said, "I applaud the appellate court's decision to uphold the will of San Diego voters by leaving the city's landmark pension reform in place."

SCOTUS decision not to review case

The U.S. Supreme Court announced on March 18, 2019, that it would not review the case regarding Proposition B, San Diego, CA v. Public Employment Relations Board.

After the California Supreme Court ruled that Proposition B was in violation of state law, the city of San Diego appealed the decision in October 2018. The city claimed that the proposition did not violate state law when then-Mayor Jerry Sanders supported the initiative and that the state court's ruling interfered with Sanders' free speech rights. The U.S. Supreme Court included the case in its order list under "Certiorari denied" on March 18, 2019.

California Supreme Court ruling on Proposition B, 2018

On August 2, 2018, the California Supreme Court unanimously ruled that Proposition B was not placed on the ballot legally.

The California Supreme Court ruled that then-Mayor Jerry Sanders had been legally required to participate in labor negotiations before supporting Proposition B, affirming the Public Employment Relations Board's decision made in 2015. The supreme court also required the California Fourth District Court of Appeal to enact a judicial remedy and to evaluate the Public Employment Relations Board's proposal to compensate employees hired since 2012 for the loss of pensions.

California Supreme Court review of district court ruling, 2017

On July 26, 2017, the California Supreme Court voted unanimously to review the April 2017 ruling of the California Fourth District Court of Appeal after city labor unions filed a petition for a review in May 2017. The unions claimed that the district court's April ruling, which allowed Proposition B to be implemented, created confusion regarding the timeline for management to negotiate with labor and would disrupt labor relations across the state. The Public Employment Relations Board also filed a petition for review for similar reasons. The court gave the following summary of issues for the review:

“

Petition for review after the Court of Appeal annulled a decision of the Public Employment Relations Board. This case includes the following issues: (1) When a final decision of the Public Employment Relations Board under the Meyers-Milias-Brown Act (Gov. Code §§ 3500 et seq.) is challenged in the Court of Appeal, what standard of review applies to the Board's interpretation of the applicable statutes and its findings of fact? (2) Is a public agency's duty to "meet and confer" under the Act limited to situations in which the agency's governing body proposes to take formal action affecting employee wages, hours, or other terms and conditions of employment?

”

Public Employment Relations Board ruling overturned by district court, 2015

In December 2015, the Public Employment Relations Board ruled that the involvement of Mayor Jerry Sanders in the Proposition B campaign constituted an unfair labor practice and urged city officials to accept defeat and to backfill pensions for workers hired after the approval of Proposition B. The San Diego City Council unanimously voted to appeal the ruling in February 2016 with an appellate court. On April 11, 2017, the California Fourth District Court of Appeal unanimously overturned the Public Employment Relations Board's ruling and allowed the city to move forward with the implementation of Proposition B.

Proposition B opponents file lawsuit, 2012

Following the approval of Proposition B in San Diego and Measure B in San Jose, union representatives who opposed the pension changes filed lawsuits asking that judges overturn the initiatives.

On July 31, 2012, San Diego Superior Court Judge Luis Vargas denied a union request for an injunction to postpone the city’s implementation of Proposition B. Vargas ruled that the city's "meet and confer" obligations had been met, and that the city could start implementing Proposition B.

Election results

Proposition B
Result		Votes	Percentage
a Yes		154,216	65.81%
No		80,126	34.19%

These final election results are from the San Diego County elections office.

Ballot text

The ballot question was as follows:

“

Should the Charter be amended to: direct City negotiators to seek limits on a City employee's compensation used to calculate pension benefits; eliminate defined benefit pensions for all new City Officials and employees, except police officers, substituting a defined contribution 401 (k)-type plan; require substantially equal pension contributions from the City and employees; and eliminate, if permissible, a vote of employees or retirees to change their benefits?

”

Support

Supporters

One campaign committee, San Diegans for Pension Reform, registered in support of Proposition B.

Proposition B proponents included:

• Mayor Jerry Sanders
• City council members Carl DeMaio and Kevin Faulconer
• KUSI-TV in San Diego

Mayor Jerry Sanders and council member Carl DeMaio had originally proposed competing city retirement plan initiatives but ultimately negotiated a compromise by supporting Proposition B. The primary original disagreement between Sanders and DeMaio concerned whether pensions for public safety workers should or should not be included in the initiative effort.

Proposition B was endorsed by the editorial board of the San Diego Union-Tribune

Arguments in favor

Mayor Jerry Sanders said, "If approved by voters, this initiative will dramatically rein in pension costs, freeing up hundreds of millions of dollars to support city services such as police, fire, parks and libraries. Public employees should not have any better retirement benefits than the people they serve."

City council member Carl DeMaio said, "We knew that the crisis was so severe in San Diego that the public wanted pension reform. But those government employee unions owned the city council. Those city council members were not going to voluntarily reform pension benefits. So you're talking about a very small group of special interests - the government employee unions - controlling the city council and keeping in essence the rest of our city held hostage. So we knew we had to get this on the ballot. Put the issue in the hands of the people to actually get reform done."

City council member Kevin Faulconer said, "This plan protects the taxpayer. It ends the pension system as we know it. It gives us the money we need for a range of neighborhood services and it shields the city from years of costly legal battles."

KUSI-TV ran a special show, "Pension Crisis: The Fight to Get it on the Ballot," and said, "KUSI supports pension reform, and hopes after viewing the special you will choose to sign the petition, and give voters a chance to take control of San Diego's budget and our future."

Donors

Approximately $1.5 million was contributed to the campaign for a "yes" vote on Proposition B, along with an additional $323,000 in non-monetary contributions.

Opposition

Opponents

The official ballot pamphlet arguments against Proposition B were signed by:

• Nan Brasher, president, California Alliance for Retired Americans
• Pat Zaharapolous, president, Middle Class Taxpayers Association
• Frank De Clerq, San Diego city fire captain
• Edward B. Harris, lifeguard sergeant
• Mary M. Enyeart, 9-1-1 emergency dispatcher

Arguments

In the official ballot pamphlet, opponents made the following arguments against Proposition B:

• "Proposition B Increases City Retirement Costs by $54 Million in the first three years. That's money that could go to improving public safety, restoring library and recreation center hours, and fixing our crumbling roads. And there's no guarantee that the ballot measure will actually save the city any money. The city's own analysis shows that the Proposition B retirement plan for new employees is more expensive than the existing plan."

• "Proposition B does not freeze pay. All projected savings from Proposition B are from a pay freeze that may not occur because pay increases are allowed with a two-thirds City Council vote, which the Charter already requires for negotiated pay increases. Employees have not had a pay increase for five years. City employees have made heavy sacrifices while Councilman DeMaio provided his staff with a 20% pay raise and refused to take a 6% pay cut along with everyone else."

• "Retirement Benefits Have Been Substantially Reduced. In 2009, San Diego reduced pension benefits for new employees and increased employee contributions by 6 percent of their pay. Total retirement benefit changes will save the City over $1 Billion."

• "Unfair to Employees. City workers are excluded from Social Security and for most of them Proposition B will eliminate the pension that serves as a substitute. Proposition B will leave some first responders without either a pension or Social Security, making it harder to recruit and retain public safety professionals. Proposition B will cost the City more, but employees will get less."

• "No Cap on Excessive Pensions. Proposition B does nothing to address $100,000 pensions. Although city workers' average pension is $40,000, some highly paid city managers and politicians receive pensions of over $100,000."

Donors

Approximately $182,000 was contributed to the campaign for a "no" vote on Proposition B:

Donors included:

Donor	Amount
National Public Pension Coalition	$25,000
American Federation of State, County and Municipal Employees	$17,500
California School Employees Association	$15,000

Path to the ballot

Supporters of the initiative collected over 94,000 signatures from registered voters of the city by October 14, 2011, in order to qualify the measure for the ballot.

The La Jolla Group was hired to assist with collecting signatures for the initiative. The cost of collecting the signatures was about $1.1 million.

Lawsuits against Proposition B

See also: 2012 ballot measure litigation

California Public Employee Relations Board

On February 13, 2012, the California Public Employee Relations Board (PERB) ruled that Proposition B constituted an unfair labor practice because the city had not met and conferred with designated public sector union representatives regarding the changes to city labor agreements. The board requested a temporary restraining order to keep Proposition B off of the ballot. On February 21, 2012, Judge William Dato declined to issue the temporary restraining order. Dato stated that the board had not made it clear that the measure was invalid.

Hud Collins lawsuit

Hud Collins, a San Diego mayoral candidate, filed a lawsuit to remove Proposition B from the ballot, claiming that it amounted to a revision of the city charter, not an amendment. According to the city charter, city charter revisions can only be introduced by the city council or a charter review commission. On February 22, 2012, judge Steve Denton ruled against Collins, stating that the initiative did not amount to a revision of the city charter.

External links

Suggest a link

• Real Pension Reform, website supporting Proposition B
• San Diego Can Do Better, website opposing Proposition B