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Ruling Could Mean Pension Pandemonium for San Diego Again

Proposition B in 2012 eliminated pensions for new employees but a new ruling of the Public Employees Relations Board concludes the mayor should have negotiated with employees before putting his name on the initiative. The unforced error could have dramatic consequences if the ruling is held up including that the city may have to:

* Pay all the city employees in the 401(k) system lost wages with 7 percent interest from each year they lost out.

* Pay the labor unions’ legal costs, including funding future legal action related to the case.

* Restore the benefit system to what it was before Prop. B

If you think the decade-long saga of San Diego’s pension system is in the past, you’re wrong.

The state labor board has thrown down a doozy of a decision against the city, attacking former Mayor Jerry Sanders and other politicos’ machinations in advance of the June 2012 ballot initiative that gave most new city employees 401(k)s instead of pensions.

The result could cost the city a ton of money, restart the pension system that had been closed for new employees and generally cause pandemonium – and all because Sanders wanted his name on the pension initiative.

It goes back to the discussions about how to get the measure, Proposition B, on the 2012 ballot. The mayor is the city’s chief labor negotiator and state labor law clearly states that city employees are entitled to bargain for their benefits. Sanders and others tried to get around this by saying that he was acting as a “private citizen” not the mayor by backing the initiative. Had Sanders tried to negotiate the deal with labor groups, it’s likely the majority of the City Council would have stymied him. But he also had the option to let others do the initiative themselves. Labor unions sued throughout the process and the state’s Public Employees Relations Board released its final ruling Tuesday. (Scott Lewis did a rundown of this legal case a few years ago in a piece about City Attorney Jan Goldsmith.)

And what the board said the city now has to do is astounding:

* Pay all the city employees in the 401(k) system lost wages with 7 percent interest from each year they lost out.

* Pay the labor unions’ legal costs, including funding future legal action related to the case.

* Restore the benefit system to what it was before Prop. B

It’s unclear how any of this would actually happen. The tax rules regarding retirement systems are really complicated. And the labor board specifically said it was not repealing Prop. B. Thus, the provisions would have to remain in the City Charter but ostensibly not followed, which seems to present a whole other set of legal issues.

Mike Zucchet, the head of the city’s white-collar labor union, said the city should immediately begin negotiating with its employees for how to fix this.

“If they don’t pay now, they’re going to pay later and the city is going to continue to suffer for it,” Zucchet said.

Current Mayor Kevin Faulconer, whose own efforts to support the initiative while a city councilman are sprinkled throughout the ruling, wants the city to appeal the labor board’s ruling to the state’s Fourth District Court of Appeal.

“Mayor Faulconer believes the will of the voters should be upheld and is confident that an appellate court will affirm the right of the San Diego people to enact pension reform,” Faulconer’s spokesman Matt Awbrey said. “The City Attorney’s office will be bringing the matter to the Council as quickly as possible.”

Here is the entire 121 page labor board ruling. You might want to read it for trip down recent San Diego political history and a pretty hilarious summary of the efforts to distinguish between Jerry-Sanders-As-Mayor and Jerry-Sanders-As-Just-Some-Guy.

This is one such passage I particularly enjoyed:

Bargaining unit employees and the public were reasonable in concluding that the Mayor was pursuing pension reform in his capacity as both elected official and the City’s chief executive officer based on his public statements, news coverage of those statements, and his history of dealing with unions on pension matters, some in the form of proposed ballot initiatives. Most telling was the April 2011 news conference, which aired after the culmination of a four-month effort to coalesce support around a single initiative measure in concert with organized private interests. The press conference took place at City Hall. The 10:00 p.m. local television news report described the Mayor’s plan to proceed with the compromise initiative as the joint effort of the Mayor and Councilmember (Carl) DeMaio. The Lincoln Club and San Diego Taxpayers Association were only mentioned as having brought the two City officials together. In the cases of vicarious liability, lower ranking management representatives are less likely to be viewed as speaking for management. The Mayor operates as a strong mayor and is the highest ranking elected official whom the public could reasonably believe spoke for the City and reflected its policy.

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