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San Diego's Pension Reform Plan Upheld

By William Vogeler, Esq. on April 17, 2017 | Last updated on March 21, 2019

In a win for San Diego voters, a state appeals court turned back public employees' claims to make the city pay for their pensions.

Public employee unions had demanded the mayor and city council meet and confer about Proposition B, a ballot measure that would shift pension costs away from the city. City officials declined, and voters overwhelmingly approved the initiative.

The Fourth District Court of Appeal said the city had no obligation to consider the unions' demands, effectively upholding the ballot initiative. Unlike city-sponsored measures, the court said, citizen's initiatives do not invoke the "meet and confer" requirements of the Meyers-Milias-Brown Act.

Collective Bargaining

The case came to the appellate court after the California Public Employee Relations Board decided the mayor violated collective bargaining rights of public employees. The mayor had campaigned for the measure, the board said, and so was required to negotiate with the labor unions.

Acknowledging the mayor's public support for the measure, the appeals court said that did not convert the voter initiative into a city initiative. The court also rejected the board's argument that the city acted as the voters' agent.

"We conclude, for the reasons previously explained, a city has no obligation under the MMBA to meet and confer before placing a duly qualified citizen-sponsored initiative on the ballot, and only owes such obligations before placing a governing-body-sponsored ballot proposal on the ballot," Justice Judith McConnell wrote for court.

According to reports, the ruling potentially saves San Diego millions of dollars for pensions of about 2,000 employees. Even so, the city still faces a $2.5 billion pension debt.

Pension Reform

Public workers typically receive a "defined benefit" pension plan, which makes a city or other municipality responsible for the retirement benefit if the employee contributions do not grow to the defined amount.

On the other hand, a 401(k) plan is typically called a "defined contribution" plan. It does not guarantee a particular amount, leaving the local government with no risk.

The case is significant particularly in California, where pension debt has pushed some cities into bankruptcy. Reuters reported that the largest debt for California cities and counties is pension liability.

"Certainly if the court had gone the other way, it might have taken some of the wind out of the sail of pension reform efforts," said attorney Michael Sweet.

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