San Jose Pension Reform, Measure B (June 2012)
Measure B gives current city workers "the option of switching to a lower pension or staying in the current plan and paying off pension debt with annual contribution increases of 4 percent of pay, capped at 16 percent or half the debt cost."
According to a 2010 audit by the city, the amount that the city pays every year for the retirement plans of its retired workers has risen from $73 million in 2001 to $245 million in 2011. Over the last two decades, the amount paid by the city in total pension benefit payments has grown sevenfold. The amount that is paid out of the account every year has been exceeding the amount paid in for over 10 years. The city's 2010 audit also says that the city is about $2 billion short of the amount that should be in the account to pay for future benefits.
The approval of Measure B attracted national attention, as did the approval of a pension reform measure in San Diego, San Diego Proposition B. The pension reform victories were seen as a blow for public employee unions, and opened up the possibility that taxpayer activists in other cities would attempt similar initiatives.
In the last full week of December, 2013, Judge Patricia Lucas of the Santa Clara County Superior Court ruled that the main provisions of Measure B that decreased pension benefits were a violation of current employees vested rights and could not be implemented. Judge Lucas did leave certain wage and health benefit reductions from Measure B intact.
- These final election results are from the Santa Clara County elections office.
- Chuck Reed, San Jose's mayor, was a leading supporter of the pension reform measure. He began advocating for pension reform in the city in early 2011. Scott Herhold, a Mercury News columnist, said, "Make no mistake: The proposal that San Jose Mayor Chuck Reed unveiled...to curtail retirement and health benefits for city employees will define his mayoral career."
- Jeff Cristina, director of Environmental Services at GreenWaste Recovery in San Jose, supported the measure.
- County Assessor Larry Stone said he supported the measure because "We need significant reform, not just incremental reform. Why? Because the current system is unsustainable."
- City Councilman Pierluigi Oliverio.
- Bay Area Council
- The editorial board of the San Jose Mercury News was in favor of Measure B, saying, "If you believe San Jose has to control the burgeoning public costs of employee pensions that have more than tripled in a decade while the number of police protecting neighborhoods and workers repairing streets has plunged, then there is really no choice on June 5: Vote yes on Measure B."
The measure was opposed by the city's public sector employee unions. In a statement released by five unions after the vote to place the measure on the June ballot, the unions said, "the mayor and his supporters scored some political points today, but only time will tell what the ultimate cost to our city will be."
Yolanda Cruz, president of AFSCME Municipal Employees Federation, and LaVerne Washington, president of AFSCME Confidential Employees Organization, opposed Proposition B. They said, "You've been misled to think pensions are outrageously high. There is definitely room for changes to some elements of the retirement plan, but the majority of city employees are not highly paid police and firefighters; they are clerks, groundskeepers, facility operators, infrastructure maintenance workers, financial staff and program managers -- and their average pension is $37,000. These employees contribute to their pensions every year and do not receive Social Security."
The question on the ballot:
|MEASURE B: PENSION MODIFICATION: Shall the Charter be amended to modify retirement benefits of City employees and retirees by: increasing employees’ contributions, establishing a voluntary reduced pension plan for current employees, establish pension cost and benefit limitations for new employees, modify disability retirement procedures, temporarily suspend retiree COLAs during emergencies, require voter approval for increases in future pension benefits?”|
Prior to litigation to change the way the ballot question was worded, it said:
|To protect essential services, including neighborhood police patrols, fire stations, libraries, community centers, streets and parks, shall the Charter be amended to reform retirement benefits of City employees and retirees by: increasing employees’ contributions, establishing a voluntary reduced pension plan for current employees, establish pension cost and benefit limitations for new employees, reform disability retirements to prevent abuses, temporarily suspend retiree COLAs during emergencies, require voter approval for increases in future pension benefits?|
Path to the ballot
The San Jose City Council voted to place the measure on the June 5, 2012 ballot in a meeting on March 6, 2012. The vote was 8-3.
Chuck Reed, Pete Constant, Pierluigi Oliverio, Madison Nguyen, Sam Liccardo, Rose Herrera, Donald Rocha and Nancy Pyle voted in favor of placing the measure on the ballot.
Ash Kalra, Kansen Chu and Xavier Campos voted against placing the measure on the ballot.
- See also: 2012 ballot measure litigation
Invalidation of some provisions
After Measure B was approved, a lawsuit was filed against it to overturn several of key provisions. Judge Patricia M. Lucas heard the case in July 2013. She was "expected to take months" to issue a ruling, which ruling finally came during the last week of December, 2013.
Provisions of Measure B targeted by the lawsuit include:
- A provision that employees will have to contribute up to 16% more toward their pensions.
- A provision that eliminates a benefit that paid retirees extra pension checks when retirement funds had high earnings.
- A provision that lowered the amount of subsidy that the city expends on health insurance subsidies.
In the last full week of December, 2013, Judge Patricia Lucas of the Santa Clara County Superior Court ruled that certain provisions in Measure B that decreased pension benefits were a violation of current employees vested rights and could not be implemented. Judge Lucas did leave certain wage and health benefit reductions from Measure B intact.
Attempt to remove
On March 16, 2012, a lawsuit was filed against the City of San Jose, arguing that the measure should be removed from the June ballot because the ballot question written to describe it isn't neutral.
The plaintiffs in the lawsuit were:
- Robert Sapien, president of the San Jose Fire Fighters Union
- Franco Vado, a police officer in the city
- Karen McDonough, an environmental service specialist
- Clifford Hubbard, a retired firefighter
Robin Johansen of Remcho, Johansen & Purcell was the attorney working with the plaintiffs. In the complaint, she said, "The code says it has to be fair and impartial, not an argument for the measure. When you look at the kinds of emotionally laden words -- reform and abuse, essential services -- those are very strongly worded phrases intended to get people to vote for the measure."
Chuck Reed said, of the lawsuit, "They're doing everything they can to try to keep the voters from considering the ballot measure. So this is just another step."
The case was heard on April 3.
On Thursday, April 5, a three-judge panel of the Sixth District Court of Appeal issued an order to prevent the printing of any ballots while litigation was pending. Johansen, the lead attorney for the plaintiffs, said, "We are pleased that the 6th District Court of Appeal will consider our emergency writ seeking to ensure that the ballot question for Measure B is impartial and complies with California election law."
Ultimately, the court ordered some changes in the way the measure appeared on the ballot, but allowed the election on the measure to go forward.
Voter guide arguments
On March 23, Beth Roth (the campaign treasurer for Measure B) and Pete Constant (a San Jose city council member) filed a lawsuit seeking to have six statements removed from the "arguments against" section of the official voter guide.
Their complaint said that Measure B opponents smuggled "false and misleading" statements into their argument against Measure B.
The six statements/phrases that Measure B supporters sought to have removed on the grounds that these statements are false were:
- "It could eliminate disability retirements for police and firefighters injured on the job and unable to perform their previous duties, it increases by thousands of dollars the amount widows and seniors pay for promised health care, and the City admitted that Measure B may not be constitutional because it violates employees’ vested rights."
- "But city officials never even tried to offer taxpayers a way to achieve any savings that would stand up in court."
- "City workers recently took 10%-18% pay cuts."
- "Employees proposed dozens of legal pension reforms that would have increased retirement ages, reduced benefit levels and lowered COLA’s. Police and fire even proposed to cut pensions back to 1962 levels."
- "politicians unsuccessfully tried to declare a fiscal emergency"
- "This pattern of inaccurate financial projections, meant to scare voters..."
- Text of Measure B
- Showdowns loom in California over public pensions
- San Jose Fiscal Reforms, website in favor
- San Jose Can Do Better, opposition website
- Mercury News, "San Jose Mayor confident on key pension vote", March 6, 2012
- Public CEO, "WILL SAN JOSE & SAN DIEGO ‘B’ FOR PENSION REFORM?", May 8, 2012
- Mercury News, "Making sense of San Jose's pension mess", March 4, 2012
- Associated Press, "2 California cities vote on public pension cuts", June 5, 2012
- NPR, "Public-Employee Pensions Face A Rollback In Calif.", June 9, 2012
- The New York Times, "Cut Salaries, Not Pensions in San Jose, Judge Rules," December 26, 2013
- Mercury News, "A defining moment for Chuck Reed", May 15, 2011
- Mercury News, "San Jose Mayor Chuck Reed, allies leave nothing to chance with pension reform measure", March 10, 2012
- Bay Area Council
- San Jose Mercury News, "Mercury News editorial: For pension reform in San Jose, vote yes on Measure B", April 21, 2012
- Mercury News, "San Jose taxpayers save by voting no on Measure B", April 27, 2012
- Mercury News, "San Jose pension fight could have nationwide implications", May 29, 2012
- San Jose Mercury News, "Both sides await ruling after San Jose pension trial", July 27, 2013
- Mercury News, "San Jose employees sue city over pension reform wording", March 16, 2012
- San Jose Inside, "Unions File Lawsuit over Ballot Language", March 19, 2012
- San Jose Insider, "Measure B Off the Ballot ... For Now", April 5, 2012
- Public CEO, "Court changes San Jose pension measure language", April 12, 2012
- San Jose Inside, "New Court Complaint over Measure B", March 22, 2012
- Copy of complaint filed about the Measure B arguments