Retirees:   This article by David Garrick from the SDUT was  published on March 26, 2019 on Court rulings on Prop B, and cleaning up after Prop B. City Attorney Mara Elliott said by email on Monday that she supports moving swiftly.”  That’s good because a 7% clock is ticking on the payments, and the likelihood of  paying attorney’s fees looms large.
Joe Flynn, Retiree

Court: S.D. must pay 4,000 workers’ pensions

Employees denied benefit by Prop. B to be made ‘whole’

By David Garrick

A state appeals court Monday ordered San Diego to financially compensate about 4,000 city employees who don’t have pensions because of a 2012 voter-approved measure called Proposition B.

A judge has ruled the measure had been placed on the ballot illegally.

California’s Fourth District Court of Appeal did not invalidate Proposition B, but it ruled that the city or its labor unions must file a lawsuit to start a potentially lengthy legal process that would lead to the ballot measure being invalidated.

Proposition B made San Diego the only California city to discontinue traditional pensions for all new hires, giving them instead 401(k)-style retirement plans. It does not apply to newly hired police officers.

The California Supreme Court ruled last year that Proposition B was placed on the ballot illegally and ordered the appeals court to come up with a solution, which was the goal of Monday’s ruling.

In a 21-page decision, the appeals court ruled the financial compensation for the 4,000 workers must be the difference between the value of a pension and the value of the 401(k)-style plans, plus 7 percent annual interest.

Estimates of the city’s costs have ranged from $20 million to $100 million based on a variety of factors, but a precise estimate isn’t possible without a comprehensive actuarial analysis.

The City Council approved $100,000 last October for an analysis of the city’s potential costs, but it hasn’t been completed.

The ruling on compensation is a victory for the four city labor unions who challenged the legality of the citizen’s initiative. They had sought the compensation remedy chosen by the appeals court, while attorneys for the city had lobbied instead for a lump-sum penalty or fine.

The compensation ordered by the court is called a “make whole” remedy, because it seeks to give the employees what they would have had if the initiative never took effect.

The appeals court’s decision not to immediately invalidate the ballot measure is a victory for the city, which argued in court papers that a separate legal process would be the most appropriate way to determine the fate of Proposition B.

The unions argued that it is inevitable that Proposition B would be invalidated and removed from the San Diego City Charter, so the appeals court should have immediately removed it to expedite the process of settling the case.

In its ruling, the appeals court said a separate legal process for invalidating the measure makes sense, partly because the measure is a citizen’s initiative that has already taken effect. More than 65 percent of voters approved Proposition B.

The ruling says a separate legal process also will provide opportunities for input by the state attorney general, proponents of Proposition B and city employees not represented by unions but who are affected by the ballot measure.

Union leaders said Monday that the appeals court’s decision not to immediately invalidate Proposition B could delay settlement talks with the city, because pensions can’t be restored for new workers with Proposition B still on the books.

“The big fork in the road is invalidation, because without invalidation you can’t put people back into pensions because the language from Proposition B will still be in the city charter,” said Michael Zucchet, general manager of the Municipal Employees Association.

The City Council does not have the legal power to remove Proposition B from the charter. That can only be done by a court or by another citizen’s initiative or ballot measure.

City Attorney Mara Elliott said by email on Monday that she supports moving swiftly.

“The city should immediately begin taking all steps necessary to comply with the court’s order in a way that is fair to both the public and to city employees,” she said. “Frank communication between the parties is essential to achieving a fair and full resolution.”

Former City Councilman Carl DeMaio, who helped write Proposition B, said Monday that supporters of the measure are exploring all legal options.

“Proposition B pension reform is a citizens’ initiative that is protected under the California constitution, and we continue to assess all of the legal remedies afforded to prevent it from being illegally overturned,” DeMaio said in a news release.

The lawsuit filed by the unions said Proposition B was illegal because then-Mayor Jerry Sanders used his power and influence as mayor to champion the measure. The unions said he was required to negotiate with them before pursuing it.

The state labor board agreed with the unions in 2015, ruling in their favor and creating the compensation formula that the appeals court ordered Monday.

The appeals court had overturned the state labor board’s ruling in 2017, but the California Supreme Court overturned that ruling last August and reinstated the state labor board’s decision.

Attorneys for the city filed an appeal last fall contending that the state ruling violated Sanders’ free speech rights, but last Monday the U.S. Supreme Court announced it would not intervene in the case.

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