Cincinnati Pension Reform Charter Amendment Initiative, Issue 4 (November 2013)

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A Cincinnati Pension Reform Charter Amendment Initiative question was on the November 5, 2013 election ballot for voters in the city of Cincinnati in Hamilton County, which is in Ohio. It was overwhelmingly defeated.

Issue 4 was one of three local measures on the ballot across the nation concerning retirement pension and health care benefits and it was the only measure that was put on the ballot through initiative. It sought to change the public pension system from a defined benefit plan to a defined contribution plan. Two other pension related initiatives qualified for the November ballot in Tucson, AZ, and Pacific Grove, CA, but were removed for legal reasons.

As of November, 2013, the city of Cincinnati had $862 million in pension liabilities. On July 18, the Cincinnati for Pension Reform Committee began collecting signatures for a charter amendment that proponents said was intended to "ensure a fair and sustainable retirement system while preserving essential city services and protecting residents from payment of excessive taxes." In early August, petitioners turned in thousands of signatures to the city hall for the charter amendment petition. In order to qualify this charter amendment for the November ballot, petitioners had to collect 7,443 valid signatures before a September 6 deadline. Issue 4 qualified for a vote with a surplus of over 1,200 signatures.[1][2][3][4]

This initiative sought to change the city's public pension plan for new hires from a defined benefit plan to a defined contribution plan. If it had been approved by voters, the amendment would also have implemented contribution caps for the city and made cost of living adjustments compatible with actual increases in the consumer price index, with a cap at 3% annually. Several other rules would also have been established by the amendment, such as a stipulation that no city employee can simultaneously earn income from a city or government job and receive retirement benefits.[1][2]

See also: Pension reform: San Jose and San Diego voters weigh in

Election results

Cincinnati Issue 4
ResultVotesPercentage
Defeatedd No44,52778.22%
Yes 12,397 21.78%
These official, final results are from the Hamilton County elections office.

Aftermath

Chris Littleton, campaign manager for Cincinnati Pension Reform, said that the ballot language was the downfall of the Issue 4, especially as the committee spent most of its funds suing to change it.[5]

Littleton said, “First off, we didn’t really get to campaign much as we spent all our funds on getting it on the ballot and then fighting the Board of Elections and then the Supreme Court. But in the end, the Board of Elections essentially inserted a lie into the ballot.”[5]

Littleton did not know one way or the other if the committee would attempt another initiative effort. But he did say, “But one thing’s for sure, we have absolutely zero faith that the politicians who put us into this mess will pull us out of it." He went on to say, "Not fixing it is not an option. What are we going to do, let Cincinnati go bankrupt?”[5]

Ohio Auditor David Yost, never expressed a position on Issue 4 but did say, “elections don’t change the math that Cincinnati is facing. The pension crisis in Cincinnati is not going to go away. And it will never be easier to fix than it is right now. ... It only gets harder from here, and the numbers only get bigger.”[5]

Text of measure

Title

An Amendment to the Charter of the City of Cincinnati to ensure a fair and sustainable retirement system while preserving essential city services and protecting residents from payment of excessive taxes.[1][6]

Ballot language:

Note: Additions to the ballot language resulting from the lawsuit were underlined by the Ballotpedia staff writer.

The question on the ballot:

Issue 4:

An Amendment to the Charter of the City of Cincinnati to Add Provisions Relative to Pension and Retirement Plans for City Employees.

Shall the Charter of the City of Cincinnati be amended to add Article XVII that would:

1. Require the City of Cincinnati to pay forecasted pension obligation shortfalls by creating sufficient new revenues, which may include new or additional taxes and fees, and/or other revenue sources, and/or by implementing sufficient cost savings, which may include cuts to city programs or services, to fund any projected shortfall of the Cincinnati Retirement System which, as determined by an independent financial audit, would result in insufficient funds being available to pay forecasted future obligations of the Cincinnati Retirement System within ten years from the date of the audit's completion;

2. Require current City employees to choose to continue to participate in a defined benefit plan with maximum allowable percentages of salary provided pursuant to retirement benefits of individual employees or enroll in a defined contribution plan under which the aggregate retirement benefits paid by the Cincinnati Retirement System may not exceed the aggregate of: a) the employee's individual contributions, which can be made at any level, b) the City of Cincinnati's contributions, which shall not exceed the employee's individual contributions, and shall not exceed nine percent; and c) the return on an investment plan to which employee and employer contributions are made. Employees may increase or decrease their retirement savings through investments.

No employee hired after the date of the Amendment shall maintain a property or contractual right to any retirement funds above and beyond those which he or she has contributed, along with the investment return earned by those funds. City Council and Voters maintain the right to reduce future benefits, as required by this Amendment or otherwise. Even the first dollar of City investments is entirely voluntary, and the City can decide at any time to end its contributions, even retroactively.

3. Provide future City employees with only the defined contribution plan described herein;

4. Provide that no past or present City employee shall be entitled to collect retirement benefits while simultaneously earning income from the City or any other political subdivision or government agency or entity;

5. Provide for a potential cost of living adjustment for beneficiaries of the Cincinnati Retirement System not to exceed the increase in the consumer price index, but which shall not exceed a simple rate of 3% per annum, which cost of living adjustment may be temporarily suspended when necessary at the discretion of the City of Cincinnati;

6. Provide for enforcement of this amendment to the extent permitted by law and further provide that any Cincinnati resident, whether injured or not, shall have the right to bring a civil or equitable action to enforce this amendment, and be entitled to have their attorneys fees and expenses paid by the City if they prevail?

SHALL THE PROPOSED CHARTER AMENDMENT BE ADOPTED?

YES

NO[7][6]

Note: The group Cincinnati for Pension Reform sued to have this ballot language changed and the Ohio Supreme Court partially ruled in its favor, granting some language changes but not others. For information on the lawsuit and to compare the old and new ballot language see this page.

Full text

The proposed addition to the Cincinnati City Charter can be viewed on this City of Cincinnati Issue 4 (November 2013), Amendment Text page.

Yes-on-4-logo.jpg

Support

Supporters

  • Cincinnati for Pension Reform Committee
  • Greater Cincinnati Tea Party organizations[8]
  • Yes To Issue 4[9]

Arguments in favor

Supporters of this amendment argued that the current retirement benefit plan was unsustainable and was causing debt and dangerous financial problems for the city. They proposed that this charter amendment would have provided sustainable retirement benefits for new city employees without requiring tax increases or the cutting of city services.[8]


"Yes to Issue 4" TV ad

Burr Robinson, a Hyde Park resident and a member of the Committee behind the amendment, expressed hope that the petition would be successful and that both Republican and democratic voters would support the proposed pension reform. He then went on to say, "This is a common-sense approach. We can’t meet our pension obligations, and the problem only gets worse the longer we stick with this current structure." Robinson also said, "The politicians simply haven't stepped up to deal with the city's pension crisis. Now it's time for the people to solve the problem."[8][10]

Paul Jacob, president of the Liberty Initiative Fund and an expert in local initiative and referendum petitions, said that the city "can't wave a magic wand to solve all of its problems, but this reform stops digging the hole deeper."[2]

Opposition

Opponents

  • Ohio Alliance of Retired Americans
  • Cincinnati AFL-CIO Labor Council
  • Cincinnati's regional Chamber of Commerce
  • Mayoral Candidate Roxanne Qualls
  • Mayoral Candidate John Cranley
  • Current Mayor Mark Mallory
  • All 9 current members of Cincinnati City Council
  • The Hamilton County Democratic Party
  • Alliance for Retired Americans
  • The Charter Committee
  • Faith Community Alliance
  • Women's Political Caucus
  • Cincinnati Says No on Issue 4[11]

On July 7, the Cincinnati City Council voted unanimously to approve a resolution urging a "no" vote on the proposed pension reform initiative. Councilwoman Pamula Thomas said, "We think it's trickery what's happening with these petitions."[10]

Arguments against

Opponents to this measure argued that under the proposed pension plan, city employees would not have as much security about their future.

Protesters holding a sign: "Cincinnati says no on issue 4"

Director of the Ohio Alliance of Retired Americans Bentley Davis had this to say about the reform: “This proposed amendment is nothing short of an attempted destruction of the retirement security for our city’s workers, those who spend their years working to make our city a great place to live and work."[8]

Campaign contributions

Support

Three committees filed expense reports in support of Issue 4. The total sum of their contributions came to almost $470,000. $69,529 of the campaign donations went to Arno Petition Consultants, a signature gathering company based in Carlsbad, California, who arranged for the signature gathering campaign that put Issue 4 on the ballot.[12]

The following data was obtained from the Cincinnati city clerk and is from the pre-election reports of each group. The following committees were registered in support of Issue 4:

PAC info:

PAC Amount raised Amount spent
Cincinnati for Pension Responsibility[13] $207,970 $92,503
Cincinnati for Pension Reform[14] $231,235 $215,317
Citizens for Responsible and Accountable Government[15] $30,000 $18,784
Total $469,205 $326,604

Cost-per-signature

According to documents submitted to the city council clerk, the Cincinnati for Pension Reform Committee paid Arno Petition Consultants, which is based in Carlsbad, California, $69,529 to collect signatures. Since 7,443 valid signatures were required and 8,653 were turned in, this amounted to a cost of $9.34 per required valid signature and a cost of $8.035 per collected signature.

Lawsuit

On September 11, Cincinnati For Pension Reform filed a lawsuit against the Hamilton County Elections Board seeking to change the language that the board approved for the ballot. The Elections Board altered the language before voting to put it before voters and the lawsuit claims that the ballot question misrepresented the wording of the full proposed charter amendment and illegally added to the text of the amendment through "conjecture and partisan argumentation." Initiative supporters especially disapproved of a section that stated that the proposed pension reform amendment would “require the city of Cincinnati to pay forecasted pension obligation shortfalls by creating new revenues, which may include new or additional taxes or fees, and/or other revenue sources ...”. The group behind the initiative requested an expedited ruling.[16]

The Ohio Supreme Court ruled partially in favor of the group Cincinnati For Pension Reform and ordered that the ballot language be changed for Issue 4. This required the re-sending of absentee ballots. Election officials said they would keep track of ballots that had already been turned in to avoid counting two votes for one person. The Ohio Supreme Court Justices did leave language that was objectionable to Issue 4 proponents, namely the sentence that said the initiative could force the city to cut services or raise fees to cover pension system liabilities.[17]

Ballot language change

See also: City of Cincinnati Issue 4 (November 2013), Ballot Language Change

In order to see both the original ballot question and the language as it was changed by the Ohio Supreme Court ruling, visit this page.

Path to the ballot

Cincinnatiseal.JPG
See also: Laws governing local ballot measures in Ohio

In 2012 the city had to contribute $35 million, nearly a tenth of its 2013 operating budget, to the retirement benefits fund of public employees, which was underfunded by $728 million.[18] Just a year later, the unfunded liabilities of the retirement fund had grown by over $140 million to the 2013 sum of $879 million. In 2013, the city was expected to put $85 million into the pension fund. This drastic growth in pension costs had raised concerns about the city's financial stability and even the risk of bankruptcy.[19]

Using a new formula that included the pension responsibilities of cities, Moody's Investor Services had downgraded the bond rating for Cincinnati in July of 2013. Moody's new rating for the city's general obligation bonds moved from Aa1 to Aa2 and revised the outlook to negative, while its outstanding economic development, non-tax revenue and Convention Facilities Authorities second lien revenue debt was moved down from an Aa2 rating to Aa3, likewise with a negative outlook.[20]

In the face of these financial difficulties and the massive $2.87 billion in pension liabilities, underfunded by over 30%, the Cincinnati for Pension Reform Committee began collecting signatures in a petition effort to put a pension reform charter amendment on the November 5 general election ballot. The committee began collecting signatures on July 18 and, in early August, petitioners turned in thousands of signatures to the city hall. In order to qualify this charter amendment for the November ballot, petitioners had to collect 7,443 valid signatures before a September 6 deadline. The Hamilton County Board of Elections scrutinized 14,215 submitted signatures, 8,653 of which were valid. This number qualified the measure for the ballot with a signature surplus of over 1,200. The signature gathering effort was run by the California-based Amo Petition Consultants, who were paid nearly $70,000 dollars for their signature gathering efforts.[8][2][3][4]

Ballot Law Portal
Laws Governing Ballot Measures

Details of the citizen initiative process in Cincinnati:

See also: Initiative process features in charter cities of Ohio

Cincinnati is a charter city, which means its voters are given the right to petition a charter amendment by the Ohio Constitution. Some charter cities in Ohio have their own procedures for petition initiatives for charter amendments, but Cincinnati follows the procedure set out in the state constitution.

Article 18, Section 9, of the Ohio Constitution says: "Amendments to any charter framed and adopted as herein provided may be submitted to the electors of a municipality by a two-thirds vote of the legislative authority thereof, and, upon petitions signed by ten per centum of the electors of the municipality setting forth any such proposed amendment, shall be submitted by such legislative authority. The submission of proposed amendments to the electors shall be governed by the requirements of section 8 as to the submission of the question of choosing a charter commission; and copies of proposed amendments may be mailed to the electors as hereinbefore provided for copies of a proposed charter, or pursuant to laws passed by the general assembly, notice of proposed amendments may be given by newspaper advertising. If any such amendment is approved by a majority of the electors voting thereon, it shall become a part of the charter of the municipality. A copy of said charter or any amendment thereto shall be certified to the secretary of state, within thirty days after adoption by a referendum vote."[21][22]

Similar measures

Approveda Proposition 201: City of Phoenix Pension Reform
Approveda Proposition 202: City of Phoenix Pension Reform
Proposed ballot measures that were not on a ballot Proposition 201: City of Tucson Pension Reform Initiative
Proposed ballot measures that were not on a ballot Pacific Grove City Initiative To Void Ordinance 02-18 Pension Increase (2013)

See also

External links

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Suggest a link

Support:

Opposition:

Additional reading

References

  1. 1.0 1.1 1.2 The text of the proposed charter amendment
  2. 2.0 2.1 2.2 2.3 Ballotpedia Staff Writer Josh Altic interview with Paul Jacob, president of Liberty Initiative Fund, September 29, 2013
  3. 3.0 3.1 Citybeat.com, "Pension Amendment Earns Spot on November Ballot," August 12, 2013
  4. 4.0 4.1 Cincinnati.com, "Pension reform petitions filed," August 6, 2013
  5. 5.0 5.1 5.2 5.3 Cincinnati.com, "City pension overhaul soundly rejected," November 6, 2013
  6. 6.0 6.1 Note: This text is quoted verbatim from the original source. Any inconsistencies are attributed to the original source.
  7. Cincinnati sample ballot for November 5, 2013, election
  8. 8.0 8.1 8.2 8.3 8.4 Cincinnati.com, "Vote sought on pension reform," July 21, 2013
  9. Yes To Issue 4 campaign website
  10. 10.0 10.1 Fox 19, "City council opposes pension ballot issue," August 7, 2013
  11. Cincinnati Says No on Issue 4 campaign website
  12. Few local contributions to Issue 4, private prison mired in violence, Ohio could limit voting Citybeat.com, "Few local contributions to Issue 4, private prison mired in violence, Ohio could limit voting"
  13. Cincinnati for Pension Responsibility expense report
  14. Cincinnati for Pension Reform expense report
  15. Citizens for Responsible and Accountable Government expense report
  16. Cincinnati.com, "Pension reform group sues to change ballot language," September 12, 2013
  17. Local 12, "Pension Ballot Ruling Leads to New Ballots," October 10, 2013
  18. Cincinnati Inquirerer, "No letup for Cincinnati’s distressed pension plan," January 2, 2013
  19. Watchdog.com, "Cincinnati’s pension costs threaten to eat it alive," June 11, 2013
  20. Moody's Investor Services, "Rating Action: Moody's downgrades Cincinnati's (OH) GO to Aa2 from Aa1...," July 15, 2013
  21. Ohio Constitution Article 18, Section 9
  22. Note: Underlining was added by the article writer to highlight relevant passages.