Pension Hotspots: Election review

November 14, 2014

By Josh Altic

The Pension Hotspots Report is a monthly publication about local pensions and pension reform efforts.

The biggest pension news from election day is the decisive defeat of Proposition 487 in Phoenix, Arizona, - the only substantial local pension reform measure on the ballot last week. Meanwhile, in predictable moves, voters in Oakland and Yorba Linda, California, approved rather innocuous pension-related measures designed to save taxpayers relatively small amounts of money.

As of November 14, 2014, ten pension related measures were proposed for 2014 ballots. Six of these were approved and two were defeated. Court decisions removed the initiatives in Pacific Grove, California, and Ventura County, California, from the ballot.

Pension-related election results:

d City of Phoenix Pension Reform Initiative, Proposition 487 (November 2014):

The only contentious pension-related measure on the ballot, which proposed drastic reform in Phoenix, Arizona, was defeated. Prop. 487 proposed switching the city's new hires over from a defined benefit pension plan to a 401 (K)-style, defined contribution plan and implementing a five-year pensionable pay cap to curtail the process called pension spiking used by retiring employees to boost pension benefits by cashing in saved up vacation time, bonuses, sick leave and other perks right before retiring.

Proponents of the initiative, including the Arizona Free Enterprise Club and Council Member Sal DiCiccio, said the measure would have saved taxpayers hundreds of millions of dollars over the next couple of decades and would have given the city a sustainable pension system, rather than a system that is creeping towards the edge of insolvency.

Opponents of the initiative claimed it was poorly written and could have negatively impacted the pensions and death benefits of police and fire personnel. Ultimately, they were able to gain the sympathy of the city's electorate, with 56.51 percent of voters rejecting the proposal.

Phoenix Proposition 487
Result		Votes	Percentage
d No		112,155	56.51%
Yes		86,302	43.49%

Doug MacEachern, writing for the AZ Central, said, "The big take-away conclusion from the defeat of Prop. 487 is that no politician of any substance is going to touch pension reform for a long time going forward."

Vice Mayor Jim Waring, who supported Prop. 487, said that even opponents of Prop. 487 must be willing to work on alternative reform because the pension problem in the city is undeniable. He concluded, "The victory dance for them can be tonight, but tomorrow, we've got to roll up our sleeves and address a potentially ruinous financial problem. The problem is accelerating, not abating. Are we really going to do nothing?"

a City of Oakland Municipal Retirement System Termination, Measure EE (November 2014):

In Oakland, voters had an easier pension decision to make. Measure EE was designed to replace an old, closed-down pension system - the Oakland Municipal Employee's Retirement System (OMERS) - with pre-purchased insurance annuities. OMERS was closed for new hires in 1970 and was replaced by participation in the pension giant CalPERS. As of November 4, 2014, the old system still paid for the retirement benefits of 22 former employees. Analysts found that the city could get more money back from the fund if it purchased annuities from insurance companies guaranteeing the same benefits to the remaining retirees. The estimated savings amounted to nine tenths of a million dollars, making Measure EE an easy sell to the voters.

Measure EE
Result		Votes	Percentage
a Yes		35,979	71.72%
No		14,184	28.28%

a City of Yorba Linda Elimination of Pension and Health Care Benefits for City Council Members, Measure JJ (November 2014):

When elected officials request a raise or increased benefits, voters are compelled to think long and hard about whether the public servants in question have earned it. When they request to have benefits cut, however, allowing more money to remain in the pockets of taxpayers, voters tend to have an easy choice. Measure JJ in the city of Yorba Linda was one such proposal. Upon approval, Measure JJ eliminated the pension and healthcare benefits for city council members going forward. Unsurprisingly, over 85 percent of voters were on board.

Orange County, Measure JJ
Result		Votes	Percentage
a Yes		13,486	85.57%
No		2,275	14.43%

In June, voters in all of Orange County overwhelmingly approved a similar measure prohibiting the county from paying pension contributions on behalf of Orange County Supervisors.

Approved

a City of Yorba Linda Elimination of Pension and Health Care Benefits for City Council Members, Measure JJ (November 2014)
a City of Oakland Municipal Retirement System Termination, Measure EE (November 2014)
a City of Yorba Linda Elimination of Pension and Health Care Benefits for City Council Members, Measure JJ (November 2014)
a City of Piedmont Pension Debt Refinance Bonds, Measure A (February 2014)
a Orange County Board of Supervisors Pension Contributions, Measure A (June 2014)
a City of Porterville Authority over City Employee Benefits Amendment, Measure Y (June 2014)

Defeated

d City of Phoenix Pension Reform Initiative, Proposition 487 (November 2014)
d City of Springfield Police/Fire Pension Fund Sales Tax Measure (April 2014)

Not on ballot

Pacific Grove City Initiative To Void Ordinance 02-18 Pension Increase (November 2014)
City of San Jose Pension Measure to Alter Measure B Reform Charter Amendment (November 2014)
Ventura County Sustainable Retirement System Pension Reform Initiative (November 2014)

See also

• Local pensions on the ballot
• Pension reform: San Jose and San Diego voters weigh in

External links

Suggest a link

• 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

Additional reading

• La Times, "California pension funds are running dry," November 13, 2014