LOS ANGELES — San Diego got a reprieve from an appeals court in litigation over voter-approved pension reform passed in 2012.

An adverse opinion from California’s Fourth District Court of Appeal could have cost the city millions in creating retroactive pensions for more than 3,000 workers hired over the past five years.

San Diego Mayor Kevin Faulconer
“This short-sighted move results in denying the public a vote and getting nothing accomplished for our city," said San Diego Mayor Kevin Faulconer.

“The taxpayer protections and savings Proposition B generates are critically important, so I’m glad to see it upheld as the law of the land,” said San Diego Mayor Kevin Faulconer. Union leaders say they plan to appeal Tuesday's decision to the California Supreme Court.

Proposition B shifted all newly-hired city employees, except police officers, from the city’s traditional defined benefit plan into a 401(k)-style retirement plan.

In a 2-1 vote, the three-court panel overturned a 2015 Pubic Employment Labor Relations board ruling that said the pension cuts were illegal, because of then-Mayor Jerry Sanders’ involvement in the successful citizen’s initiative responsible for the changes.

The state’s labor relations board had ruled that city officials should have discussed Proposition B with its six unions before it put it on the ballot.

The issue was whether it was illegal for elected officials to campaign for the measure without first negotiating with city unions. The judges found that they were within their rights because they campaigned as individuals, advocacy protected by state law and the First Amendment.

“It’s disappointing,” said Michael Zucchet, general manager of the San Diego Municipal Employees Association.
The union plans to speak with its general counsel today about appealing the case to the state’s Supreme Court, Zucchet said.

“This really essentially ratifies a scheme that San Diego executed to avoid the state bargaining law,” Zucchet said.

“Mayor Sanders testified under oath at the labor relations board that he wanted to avoid laws regarding employees. To get around the law, he launched this citizens’ initiative and he did it from the mayor’s office.”

Sanders and other supporters of the initiative gathered signatures as “private citizens” to avoid a requirement that public officials have to meet with unions before placing pension-related issues on the ballot.

“The reason I did it as a private citizen was because if the council put it on the agenda, it would have been contested immediately by the unions,” Sanders said in a 2012 speech to the National Press Club in Washington, D.C. “If we do it as a signature gathering, and I did it as a private citizen, we can put it on the ballot and negotiate afterwards.”

As the lone city offering new employees a 401(k) instead of a traditional pension plan, San Diego has experienced some well-publicized problems filling vacancies.

The city solved problems caused by vacancies in 911 call operator positions in the city by raising salaries for the position by 20%, Zucchet said.

The city is also experiencing problems filling mid-to-high level management positions, because experienced mid-level managers in surrounding cities, who would typically apply to San Diego, aren’t willing to lose their years of service accumulated in the California Public Employees' Retirement System, the union leader said.

The San Diego County Taxpayers Association and many city leaders lauded the ruling.

“The decision is a reaffirmation of the right and power of citizens to participate in our democratic process to enact positive reforms when the systems in place are resistant to change,” said Haney Hong, president and chief executive officer of the San Diego Taxpayers Association.

The taxpayers association supported Proposition B in 2012 “as a sensible, responsible step toward addressing the City of San Diego’s increasing pension debt,” Haney said.

He urged other cities in the region to take similar steps.

“This citizen’s initiative gave City Hall new tools to bring stability to San Diego’s financial problems, and this ruling means we don’t have to turn back the clock on pension reform,” Faulconer said.

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