San Diego appeals pension overhaul threat

San Diego will appeal a state labor board ruling that casts doubt on the city’s aggressive pension cutbacks approved by voters in 2012.

The City Council voted unanimously in closed session on Tuesday to appeal the Public Employment Relations Board’s Dec. 29 ruling, which orders the city to spend millions creating retroactive pensions for roughly 2,000 employees hired since the pension cutbacks took effect.

The ballot measure, known as Proposition B, replaced guaranteed pensions with 401(k)-style retirement plans for most new city hires.

The PERB ruling said former Mayor Jerry Sanders and other city officials illegally put Proposition B on the ballot without conferring with labor groups.

City Attorney Jan Goldsmith said Tuesday that an appeal was necessary because PERB got it wrong.

“Even people who opposed Proposition B understand that the PERB decision is an unconscionable overreach that gives union leaders the power to thwart the public’s will,” said Goldsmith. “The people’s right to initiative is guaranteed by the California Constitution. This right cannot be bargained away in a back room, or stolen from the people by a government agency.”

Councilman David Alvarez said he voted to appeal for the purpose of legal clarity.

“It is critical that the city receive clarity from the appellate court on the implementation of Proposition B and how retirement programs must be administered for its employees,” he said. “This clarification can only be provided by the court, that’s why I voted to move forward in appealing the ruling.”

Labor leaders in late December praised the PERB ruling and urged city officials to accept defeat so they could rein in the potentially spiraling costs of ongoing litigation.

Many city budget projections and proposals rely on future pension savings creating by Proposition B, so any softening or elimination of the measure could have a significant effect.

The case will now head to California’s Fourth District Court of Appeal, and possibly the state Supreme Court after that.

Since the litigation was filed, city officials have raised questions about how to comply with what the city’s labor unions are seeking.

Those questions include whether employees without pensions would have to retroactively pay thousands in matching pension contributions they haven’t been making over the past three years, and whether the city’s contributions to 401(k) plans for employees without pensions would mitigate how much the city owes them retroactively.

The city has hired roughly 2,000 employees without pensions since the cutbacks took effect in July 2012. The PERB ruling would require the city to backfill pensions for those workers, pay them 7 percent interest as a penalty, and cover their attorney’s fees.