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KPBS Midday Edition

Ruling On San Diego's Pension Reform Initiative Not End Of Debate

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State Labor Board Finds City Of San Diego Violated Law With Proposition B
State Labor Board Finds City Of San Diego Violated Law With Prop B GUESTS:Michael Zucchet, general manager, San Diego Municipal Employees Association Chris Cate, San Diego City Councilman, District 6

This is K PBS midday edition I'm morning About. It 2012 ballot initiative which eliminated pension benefits for most city employees was found and validated by state law -- regulators. -- Was found in ballot by state regulators. They found that proposition be violated city employee bargaining rights. It upheld previous ruling by administrative judge. They are expected to repeal the ruling but if it is rescinded it stands. To be an expensive new your surprise for San Diego. Joining me is Michael Zucchet he is the manager of municipal employees Association and San Diego city Council member Chris Cate is here. Welcome. Michael why is this ruling happening now almost 4 years after the initiative was approved by voters? The answer might take four years. There's been a lot of proceedings and appeals and switching back from the Public employment relations Board to the Superior Court to the appellate court in the city filed more appeals. It has been a lot of litigation and has taken a long time but it all stems from about a week long proceeding up in Glendale that the city participated in an witnesses were called it was like a mini trial with Mayor Sanders and all of his staff about what happened with proposition be -- Proposition B and that's the record that everyone is fighting about now. What they said is what the city did back in 2011 and 2012 violated the law. On what grounds did PERB ruled that? State bargaining law a lot of people like to say that you have to do with the unions say and it's a very liberal law. It's a very simple law. What it dictates is that you have to talk. You have to have communication between public employees and their employer. You don't have to do with the employee says is -- but you have to sit down with them in good faith and have in exchange for ideas before you put something on the ballot. With the city refused to do back in 2011 when the mayor wanted to put this on the ballot was talk to unions. We made a demand to talk about it and the city attorney Roback and said we don't have to. It stems from a relatively small tenet of labor law which is you have to at least have a good faith exchange of ideas would -- before you make the decision to do something that will be so impactful on employees. The city refused to do it in their refusal to do that is why we are here today. Councilman Chris Cate remind us what transcended to change city pensions. It was a citizen initiative. We collected 116,000 signatures to place this measure on the ballot and it meant -- amended pension benefits for new employees and there's a five years -- freeze on pension salaries for current employees. For new nonpolice employees they were put into a defined contribution plan where the amount contributed by the city was set for both general employees and for firefighters and lifeguards and four police officers they are fired by the pension plan was going to be capped. It was pension reform for all employees tailored for what we felt was right for our city and how we're going to be operating moving forward with our employee groups. I think the important thing to remember is that this was a citizens initiative. We were out collecting signatures for a long period of time in getting folks to sign the petition and places on the ballot and there was no action by the Council to places on the ballot. Whited city leaders want to cut the defined-benefit pensions for city employees? When you look at the cost we were paying north of $260 million annually for pension benefits. We had a $2.2 billion liability at that time and we wanted to make sure that these costs were not going to continue to increase at a rate where we could not continue to provide services for our residents and citizens. We wanted to make sure that pension reform is going to happen in the city of San Diego in a way that would account for what we would provide for a city. This reform provides stability within our budget how much we are going to pay for retirement for employees. I will ask you both because I believe there is some dispute about this. What kind of savings has property Jenners -- has Prop B generated for San Diego? The five-year pensionable pay freeze which was done by agreement not because of prop B that was done by agreement has produced significant savings for the city. Whether that is $500 million over 30 years over -- or $1 billion but probably somewhere in that range. What is at issue in this PERB ruling is the other part of what the Councilman said is eliminated pensions for new employees. There had been no savings related to that and in fact some of the cost that the Councilman just talked about those costs actually went up a little bit. In general it is fair to say that the real money savings of prop the was the five-year pension pay freeze which was done by agreement already and no matter what happens with this ruling that we are talking about today that pay freezes stays. If the defined-benefit where there's no savings to speak of. No savings to speak up but you see savings down the line. The cost of the planned when you look at and define something for a defined pension plan. For the defined-benefit plan you look at what the normal cost is for the benefit. We also have to pay for as taxpayers any losses on the system. We also have earnings that are on the hook for this too. When we look at what the cost is for prop B for 2% for general employees and 11% for safety employees plus the total cost to provide the benefit there actually are savings in the actual evaluation they put out every year shows the true cost of our pension plans are as a % of pay for employees. I would argue there are savings now because we have not seen earnings that we are expecting from our pension system. As I said I figured there would be disagreement about that purchase -- question but considering that this is such a fundamental part of the way the city of San Diego is now thinking about its long-term budget and so forth, why did the city not talk with the unions if that was going to be such an important point of conflict in the future. Back in 2011 and then if they cannot get the agreement from the union then move on with some sort of initiative. The city Council did not act and say we were going to place this measure on the ballot. The only action they had to take was 160,000 individuals in Rogers -- registered voters force them to pick -- placed on the ballot. The proponents of us and this is a citizens initiative. The proponents of the measure when they sign the measure are not city Council measures. We went out and collected signatures. Just because of elected officials supported the measure does that trigger the requirement to me. That's what our dispute is. And you look at the question of whether this was expected or not I would argue that was it was expected especially when there were three lawsuits filed. One to not place the measure on the ballot to to stop the implementation of it and to stop the hiring freeze after it was passed and they were negotiating the terms of the agreement for implementation. When you have a body of jurisdictional agency that was saying don't even vote on this we don't want anybody to vote on this I think this was expected down the line and I would argue that the voters nearly 2/3 that supported this should see this implemented all the way through. Let me ask you about that, Michael. Chris was saying that the whole idea of this PERB ruling has to do with whether or not this is a citizens initiative or whether this was promoted by people like former Mayor Jerry Sanders in his official capacity. Which of the PERB board find? This is the heart of the issue and the Councilman and skillful when he talks about what the city Council did or did not but what is really at issue is with the mayor did. At that time it was Mayor Jerry Sanders and he is the most significant player here because under the city's charter it is the mayor's office that initiates or not the meeting for process. What was literally undisputed during the proceedings the city put on no witnesses to dispute this is that the mayor and his staff used city resources city time and city employees to write drafts negotiate with other supporters in organizations and Council members as to what was going to be in the initiative and fund raise and it was literally a campaign central in the mayor's office. Staff meetings and this is where the idea was hatched and written and determined none of that was disputed. The city argument was basically who cares. At the end of the day the citizens will vote on it so we don't need to worry about it. What if PERB says is that the mayor can't take off his mandated that the makes and the only entity in the city to have the responsibility to meet with the units. -- Unions. He can't just take it off and say I'm a private citizen today. That's the crux of it. We can disagree on the legal significant but the mayor's role was paramount here. There is a listener who wanted me to ask whether paid signature gatherers for Proposition B. Like any petition weather -- measure whether it was this the minimum wage there are going to be paid signature gatherers. That happens with every initiative no matter what whether it is Jerry Brown's tax increase initiative or whatever there are paid signature gatherers. You asked about the savings of prop B. One of the cost is that what the proponents argued back three or four years ago is that we would be leaders in pension reform and other cities would follow. As we sit here in 2016 no other cities have followed. We are the only city in the state of California that does not offer to find -- defined-benefit pensions to new hires. If you are a firefighter, librarian, city planner, surveyor and you are looking for a career in public service you go anywhere but San Diego because of that. It's developed into a recruitment problem for city employees. We talk about the employees we all have to acknowledge that there's cost to it to in the city of mass --'s San Diego it's manifesting itself and we are having trouble hiring people. Always pension still exist in every other jurisdiction except San Diego. I think two things. The reason the other 17 cities in the region have not been able to move forward with pension reform is because they are under the CalPERS system. Unfortunately that is operated by a lot of folks that are represented by unions or serve on CalPERS and the only way to perform it is by a citizens initiative. That's the only way that we can reform. If you talk to the mayors in the Councilman and would love to move forward with what we did but they are unable to legally because they are under CalPERS. When it comes to hiring this is not an issue because of prop B. The city has been in a financial mess for a long time up until recently and we have not been able to provide services to employees. Now that things are changing we are addressing issues where we can in terms of hiring employees. We just had an agreement that was approved almost unanimously with MEA which we said that we have issues with certain types of job categories and we are going to give them what they need to hire employees. This is not a situation in which we are going to find ourselves solved within a matter of two or three years. It will take a long time to ramp up and hire the employees that we want to hire to provide the services of the residents deserve. That was not a problem that was just caused because of prop B. This has been a Mac -- decade in the making a kind of get out of this mess. The municipal employees Association is animate the a -- MEA is just to be clear. This was overwhelmingly approved by San Diego voters. Shouldn't that count for something in the way that this situation works out? Sure but as a threshold matter what we are talking about and what we have been litigating is whether the city violated the law and putting it in front of those voters. If the end is just -- justify the means then yes. We live in a society where the law matters and we do not get to choose which laws would like better than others and the law was violated here. I daresay even the city attorney that she would not put it in those terms but he would agree with what happened. The city's defense is sort of so what. At the end of the day the voters have spoken don't worry about it nothing to see here. The problem is the fourth district Court of Appeals has already said in response to a city petition to sort of skip the PERB process altogether they said it does matter. It matters a lot and these are the quote unquote real judges at the city's attorney has been said he wants to get this in front of their the ones that already ruled against him in 2012 when he wanted to skip the whole process. The court will defer to permit it matters -- will defer to PERB it matters and we would be better off finding a resolution than continuing to litigate. What is the next step? The city Council has to meet and decide whether to appeal? Yes that is based on what he has said. The next step of the process is to appeal. This is in a court of law where the willing but he is not cited one way or another. They will make the determination as opposed to a PERB that we know is staffed in another direction. That would be the next logical step would be to take with the voters said to support and implement prop B and have it run through the court process. Thank you both very much. I've been speaking with Michael Zucchet was general manager of the municipal employees Association and city councilmember Chris Cate. Thanks a lot. Still ahead as the new year 2016 begins we will ponder the concept of time. That as KPBS midday edition continues.

The state Public Employment Relations Board ruled last week that the city of San Diego violated state law by not negotiating with employee unions over a 2012 ballot measure that eliminated guaranteed pension benefits for most city employees, but that won't be the end of the issue.

The city attorney has said he intends to ask the City Council to appeal the ruling over Proposition B, which upheld a previous decision by an administrative law judge.

The dispute is over whether city officials were required to negotiate with the San Diego Municipal Employees Association and three other unions before changing the pension system, because the citizens initiative was pushed by city political leaders, including then-Mayor Jerry Sanders. The municipal employees union is the city's largest, with about 4,000 members. Police officers were exempt from the initiative.

"It was literally campaign central in the mayor's office," Michael Zucchet, the union's general manager, told KPBS Midday Edition on Monday. He said Sanders' staff was involved with drafting the initiative and raising funds to support it.

"None of that was disputed (in previous hearings)," Zucchet said. "The city's argument was basically, 'Who cares? At the end of the day the citizens are going to vote on it.'"

City Councilman Chris Cate wrote the fiscal impact analysis of Proposition B when he worked for the San Diego Taxpayers Association. He said on KPBS Midday Edition that the initiative was driven by the citizens.

"The only action (the council) had to take was because 160,000 San Diegans forced them to put it on the ballot," Cate said. The council supported the initiative because it would stabilize ballooning pension payments, which at the time added up to more than $260 million annually, he said.

"I would argue that the will of the voters — nearly two-thirds approved it — should see this implemented all the way through," Cate said.

Zucchet said that no matter which side an appeals court takes, taxpayers will continue to see savings from a five-year freeze on pensionable pay. While the freeze came at the same time as Proposition B, it was negotiated with the union and not part of the ballot measure.

Proposition B changed the city's pension system for most of its employees from a defined benefit plan, which the city pays into on the employee's behalf, to a 401(k)-style plan that the employee pays into.

No matter what happens with this ruling, that pay freeze stays.