SAN DIEGO (CNS) - The state Supreme Court ruled that a San Diego citizens' initiative that cut back city employee pensions was illegally placed on the ballot, and ordered an appeal court to consider a remedy.
Proposition B, initially approved by voters in 2012, eliminated guaranteed pensions for new city employees, except police officers, and replaced those benefits with 401(k)-style retirement plans.
In 2015, one of the city's largest public sector unions challenged the benefit system, alleging former Mayor Jerry Sanders and other officials illegally placed the measure on the ballot without conferring with labor groups. The Public Employees Relations Board ruled with the union, but the Fourth District Court of Appeal reversed the decision in April 2017.
Now, the appeal court's decision is overturned.
"We reverse the Court of Appeal's judgment and remand for further proceedings to resolve issues beyond the scope of this opinion," wrote Associate Justice Carol A. Corrigan in Thursday's decision, in agreement with the other five justices.
After the decision was made, Mayor Faulconer released this statement,
“San Diego pension reform remains the law of the land and today’s Supreme Court decision keeps Proposition B in full force and effect. While the court’s deference to an earlier ruling means the debate over this issue is not over, it does not change the fact that voters amended the City Charter to bring fairness to city pensions.
My administration will work closely with the City Attorney’s Office on the direction provided by the Supreme Court. The public mandate for reform is as valid now as it was when Proposition B passed in 2012, and I will insist that taxpayers continue to be protected as we move forward.
Pension reform gave us the tools to clean up San Diego’s finances, save taxpayers hundreds of millions of dollars and return government’s focus to improving our communities. The will of the public is clear, and I’ll continue to fight for the change San Diegans called for.”
The court ruled that although it was a citizens' initiative, Sanders' support of Prob B as policy warranted engagement with the unions under the Meyers-Milias-Brown Act, which gave city and county employees the right to collective bargaining in 1968.
Governing bodies "or other representatives as may be properly designated" need to engage with unions "prior to arriving at a determination of policy or course of action," according to the act.
Sanders had said he supported the measure as a private citizen, not a public employee. The Supreme Court ruled that Sanders did use the power of his office to push the initiative, however.
"He consistently invoked his position as mayor and used city resources and employees to draft, promote and support the Initiative. The city's assertion that his support was merely that of a private citizen does not withstand objective scrutiny," Corrigan wrote.
In overturning the Public Employees Relations Board ruling in 2017, the appeal court took an "unduly constricted view of the duty to meet and confer," according to the Supreme Court ruling.
The Supreme Court ruled that the appeal court address an "appropriate judicial remedy" for the illegal placement of the initiative on the ballot.
The Public Employees Relations Board had previously ruled the city must pay employees "for all lost compensation" related to lost pension benefits, which would cost millions of dollars.
The 401(k)-style system was originally intended to save taxpayers money by reducing future pension liabilities. Approved by 65 percent of voters, the system was the first of its kind among California municipalities.