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San Diego begins to unwind illegal pension reform measure

The San Diego City Council on Monday voted to offer guaranteed retirement income to thousands of current and former city employees who were unlawfully excluded from the pension system, after a string of legal defeats for supporters of the 2012 ballot measure Proposition B.

The California Supreme Court ruled in 2018 that the measure, which replaced pensions with 401(k)-style retirement plans for all new city employees except police officers, was illegally placed on the ballot. State labor laws required the city to negotiate with its employee unions first before changing their retirement benefits, the justices found.

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It took several subsequent court battles to finally reach Monday's action, which began the process of remedying the city's mistakes. All employees hired between July 20, 2012, which Prop B took effect, and July 10, 2021, when it was officially invalidated, will have the option of either sticking with their private retirement accounts or using those funds to buy into the pension system.

The city must also pay a 7% cash penalty to its employees impacted by Prop B. City officials estimate the total cost of undoing the measure could reach $80.7 million, though it will almost certainly be less depending on how many employees opt to stick with their current retirement plans.

Monday's actions covered only two of the four city employee unions covered by the invalidation of Prop B — those representing white and blue collar workers. Unions representing firefighters and deputy city attorneys are still in talks with city officials over how those employees will be dealt with.

San Diego begins to unwind illegal pension reform measure

Councilmember Vivian Moreno called Prop B a "disaster" and said the supposed savings promised by its supporters never materialized.

"In fact, the opposite happened," Moreno said. "The city began to have major problems in recruiting and retaining city employees because we couldn't offer competitive benefits. That means hundreds of positions sat vacant, which had the effect of service levels decreasing for city residents."

Councilmember Chris Cate, the only sitting councilmember to have publicly supported Prop B, acknowledged he and his allies had lost the legal battle and the city had no choice but to comply with the court's orders.

"We need to move on, we need to move forward and (make) the best decision for residents, taxpayers and our employees," Cate said.

Councilmembers Marni von Wilpert and Raul Campillo both recused themselves from Monday's vote because they previously worked in the City Attorney's Office and would be covered by future actions unwinding Prop B for deputy city attorneys.