Pension Hotspots: Trend of unfavorable ballot summaries for pension reform measures continues
By Josh Altic
- The Pension Hotspots Report is a monthly publication about local pension reform efforts.
It happened again: pension reformers face yet another objectionable description of an initiative on the official ballot. Proponents of Phoenix Proposition 401, outraged over ballot language approved by the city council, decided to spend money on campaigning for their measure, rather than fighting the city in court. Meanwhile, Ventura County features a classic state control vs. local control court battle over pension reform that could affect millions of Californians. These, among other stories, are covered in the July edition of the Hotspots report.
As of July 25, 2014, eight pension related measures have been proposed. Three of these have been approved, one was defeated, and the remaining four are pending. A court decision on June 26, 2014, removed one initiative, the one in Pacific Grove, leaving two measures scheduled for voter decisions and one in the planning stages.
Pension reformers outraged over ballot language chosen by Phoenix city council:
With the increased awareness of pension sickness across the nation and the subsequent efforts to enact reform at the ballot box, a pattern of controversial ballot summaries has emerged. The most notable case occurred when Kamala Harris, the Attorney General of California, provided a ballot title and summary for San Jose Mayor Chuck Reed's statewide pension reform initiative that supporters saw as misleading and biased. Proponents of the initiative disapproved so strongly of the language that they decided to abandon efforts to put the measure on the ballot. Last year, in Cincinnati, voters rejected a pension reform initiative - Issue 4. Proponents said that the unfavorable ballot language provided by the Hamilton County Board of Elections was a huge factor in the defeat of the initiative. They blamed the court fight over the ballot language for diverting funds away from campaigning and concluded that the ballot question ultimately swayed voters against Issue 4. Concerning the ballot summary and the defeat on election day, Chris Littleton, campaign manager for Issue 4, 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.”
In Phoenix, supporters of Proposition 401 were disappointed to see the trend continue following the approval of ballot language for their pension-reforming initiative. Some called the ballot summary inaccurate, wildly misleading and a betrayal of the voters. Prop. 401 supporters' resentment focused on a sentence in the summary that claims the initiative would "prohibit City contributions to any other retirement plan, including deferred compensation plans, post-employment benefit plans and the police officer and firefighter retirement system." Critics of the city council argue that the initiative explicitly does not affect the state-run pension plan for police and firefighters, making it unconscionable for the ballot language to claim as uncontested fact that the initiative would prohibit the city from providing funding for the police and fire retirement system.
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Robert Robb, writing for the Arizona Republic, said:
I've been around politics a long time and don't expect politicians not to engage in politics. Yet there are times when even the crassest politicians are expected to act dispassionately and honorably. Crafting ballot language is one of those occasions. The voters are entitled to a neutral description of what they are being asked to decide, not language declaring as uncontested fact something very much subject to disputation.
Mayor Greg Stanton and the five council members who adopted this propagandistic ballot language – Kate Gallego, Michael Nowakowski, Laura Pastor, Daniel Valenzuela and Thelda Williams -- have betrayed the voters and dishonored themselves.
Stanton, who supported the ballot language ultimately approved by the city council, insisted the language was a fair representation of the initiative text. He responded to critics, "They can spin this any way they want. But the facts are that they blew it when it came to crafting the initiative language itself."
While a lawsuit was definitely discussed, the group behind the measure was afraid that its initiative would suffer the same fate as Issue 4 in Cincinnati, with most of available funding spent fighting a legal battle with the city, leaving no money for campaigning and advertising. In the end, they decided not to file a lawsuit over the ballot language, opting, instead, to go directly to the voters and attempt to promote their position directly. Speaking of the actions of city officials, executive director of the Arizona Free Enterprise Club, Scot Mussi, said, "They're going to keep spreading the same lie over and over again. We're better off going to the voters, explaining. We believe we'll prevail doing that."
Seeking to keep public safety officers from leaving San Jose in droves, the city council discusses a ballot measure proposal to soften 2012 pension reform:
With crime rising and the number of arrests decreasing, San Jose City lawmakers are regretting some of the pension reforms approved by voters through Measure B and have discussed putting a charter amendment before voters in November that would relax the 2012 reform. The bundle of reform provisions approved over two years ago sparked a harsh battle between the city, desperate to keep its head above water by cutting down huge pension costs, and labor unions representing the firefighters and police officers of the city. Some of the most contentious provisions of the measure that decreased pension benefits and increased employee contributions were already invalidated in court. According to the San Jose Police Officers Association, other provisions of Measure B that decrease disability protections in part by requiring all injured workers to prove they are unable to perform desk work before qualifying for disability retirement, have pushed dozens of officers away from the city. San Jose Police Officers Association President Jim Unland said the officers are leaving "because they have the worst pension plan in the state, it provides no disability protections for them if they're seriously hurt." Unland pointed out that the city hired 50 police officers in September of 2014 and that most of them left before a year had passed. Unland said, “We have thirteen remaining. We can't continue to do this."
Early in July, city officials announced a potential ballot measure that would soften Measure B reforms. The proposal would allow all public safety workers injured for more than a year to qualify for disability retirement. The plan, which was endorsed by Mayor Chuck Reed, would also allow any city officers that have left the city to enroll under the better, pre-Measure B pension benefits if they return by the end of 2016. Although city leaders hope to appease police officers with this measure, many union representatives say it does not do enough. Ben Field, head of the South Bay Labor Council, said, "They want to look like they're doing something about the problem that they've created," but he insisted that the plan "does not solve the public safety crisis -- it will not help the city recruit and maintain police officers."
The El Pasco City Council is batting around the idea of diverting more tax revenue to the city's perpetually underfunded police and fire pension fund. City officials and the pension fund board are happy with the progress the fund has made, moving away from dangerously low funding ratios and high unfunded liabilities, but believe progress should continue. The chair of the fire and police pension board, Lt. Tyler Grossman, said, “I'd say the fund is healthy, it’s the well being of the fund we are trying to protect. That’s what was neglected in the past." City Representative Cortney Niland (District 7) spoke about the importance of a healthy pension fund for the overall financial well-being of the city. Niland said, "We're going to have to carry the unfunded liability on our books going forward. So that's something that could affect our debt service, that's something that could affect our bond rating. And so, we're going to do everything we possibly can to say, how can we stay on top of this, that we are closing the gap for the unfunded liability and doing everything we can to protect the city's financial health."
The city is looking to increase both taxpayer contributions and employee contributions to the fund. Currently the city makes payments equal to 18.5 percent of police and firefighter salaries to the pension fund every year, a maximum level set by the city charter. According to a new state law, however, the city council has the authority to alter this maximum contribution. City officials have proposed boosting city payments from 18.5 percent to 21.06 percent of salaries by 2018, provided police safety employees are willing to contribute 16.53 percent of their own salaries to the fund - the rate for which firefighters are currently responsible. This would result in increased city contributions of about $550,000 per year. City officials, while not required to seek voter approval, have contemplated adding the proposal to the November city ballot anyway. When asked if the possibility of switching the city to a 401(k)-style, defined contribution plan had been considered, Grossman answered in the negative, saying that such systems caused too many problems and that he was unaware of any big cities in Texas that used such a system.
Behind the scenes
Lawsuit over Ventura County pension reform initiative could decide the fate of pension reform in 20 other California counties as well:
Last month's Hotspots report featured the lawsuit currently ongoing over the proposed initiative in Ventura County, California, which seeks to move new county employees over to a 401(k)-style, defined contribution retirement system. This month's edition will drill down into the importance and widespread effects of the court's ruling, which could affect millions of Californians. The suit, filed by a coalition of labor unions called the Citizens for Retirement Security, claims the county--and therefore the county voters--have no power to alter its own pension plan. To understand the full implications of the argument and the importance of this lawsuit, some background on county pensions in California must be understood. According to state law, California counties have three options when it comes to pension plans for public employees:
1.) The county may provide its own, independent pension fund and system; two counties use this option.
2.) The county may contract directly with CalPERS; 37 counties use this option.
3.) The county may accept and enter into a pension plan created and regulated by the County Employees Retirement Law of 1937; 20 counties accepted the 1937 act.
Ventura County voters ratified the 1937 Act, making it one of the counties that chose the third option. According to plaintiffs in the Ventura County court case, the act has no provision allowing for a county to withdraw, which means that, once a county accepts the state law and the accompanying system, it cannot alter that system without authorization from state legislators. On the other side, attorneys defending the pension-altering initiative argue that because ratification of the act was accomplished by a county vote, county voters have the authority to repeal the decision. Because the arguments presented by both sides of this battle between state control and local control affect any county that has joined the state system, its outcome could affect the lives of millions of Californians. Below is a list of the 20 counties that accepted the 1937 Act and will be affected by the ruling:
- Contra Costa
- Los Angeles
- San Bernardino
- San Diego
- San Joaquin
- San Mateo
- Santa Barbara
List of 2014 local pension measures
- Ventura County Sustainable Retirement System Pension Reform Initiative (November 2014)
- City of Phoenix Pension Reform Initiative, Proposition 487 (November 2014)
- City of San Jose Pension Measure to Alter Measure B Reform Charter Amendment (November 2014)
- County Employees Retirement Law of 1937
- Morningstar, "Morningstar report analyzing public pension debt on a state level," September 16, 2013
- Pew Charitable Trust, "Cities Squeezed by Pension and Retiree Health Care Shortfalls," March, 2013
- Moody's website
- Standard and Poor's credit ratings website
- Governmental Accounting Standards Board website
- Pension Tsunami website
- Pew Charitable Trust, "A Widening Gap in Cities Shortfalls in Funding for Pensions and Retiree Health Care," January 16, 2013
- Public CEO, "Can Local Voters Phase Out County Pensions?," June 30, 2014
- Huffington Post, "Pension Cutters Hope California Ballot Measure Could Start A Domino Effect," July 24, 2014
- Moorpark Acorn, "Like it or not, pension proposal deserves place on ballot," July 3, 2014
- Cincinnati.com, "City pension overhaul soundly rejected," November 6, 2013
- Note: Underlining added by Ballotpedia writer to add clarity and emphasis.
- Arizona Republic, "Phoenix leaders fighting over pension-reform ballot language," July 2, 2014
- Arizona Republic, "Phoenix council betrays voters, dishonor themselves," July 7, 2014, archived July 16, 2014
- Note: This text is quoted verbatim from the original source. Any inconsistencies are attributed to the original source.
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- Arizona Republic, "The group has said the ballot language is biased," July 23, 2014
- Mercury News, "Pension reform: San Jose ballot initiative would water down Measure B -- is it enough?," July 2, 2014
- KTVU.com, "San Jose City Council creates ballot initiative on pension plan changes," July 2, 2014 (dead link)
- KVIA.com, "City considers raising contributions to police and fire pension fund," July 23, 2014
- KFox14, "City increase to police/fire pension fund could go to voters," July 22, 2014
- Sacramento County Employees' Retirement System (SCERS) website, "SCERS Website Handbook: California Counties' Retirement Systems," accessed July 25, 2014
- Note: San Francisco County and City has its own system, as well as contracting with CalPERS, and is thus counted twice, once under option one and again under option two.