Legal Dispute Means Reed Pension Initiative Delayed Until At Least 2016

San Jose Mayor Chuck Reed’s proposed statewide ballot initiative, which seeks to obliterate public sector worker pension rights, hit a snag last month when California Attorney General Kamala Harris released language summarizing it.  The proposed initiative would amend the California constitution to allow state and local governments to alter pension formulas for current employees.  In effect, the proposal would permit state and local governments to renege on promises made to their employees.

Under state law, once a proposed statewide ballot initiative has been written, it must be submitted to the Attorney General.  The Attorney General then drafts a title and summary for the proposed ballot initiative.  At that point, the proponents of a ballot measure can begin to collect the signatures necessary to qualify the initiative for the ballot.  The title and summary must be placed on all petitions that are circulated for signatures.  In the case of Reed’s proposed ballot initiate, Attorney General Harris drafted the following summary:

Eliminates constitutional protections for vested pension and retiree healthcare benefits for current public employees, including teachers, nurses, and peace officers, for future work performed. Permits government employers to reduce employee benefits and increase employee contributions for future work if retirement plans are substantially underfunded or government employer declares fiscal emergency. Requires government employers whose pension or retiree healthcare plans are less than 80 percent funded to prepare a stabilization report specifying non-binding actions designed to achieve 100 percent funding within 15 years…

The fiscal summary of the proposed initiative indicated that costs to state and local governments “could exceed tens of millions of dollars initially, but would decline in future years.”

Last month Reed filed suit against Attorney General Harris, and Secretary of State Debra Bowen, in Sacramento Superior Court, challenging the summary on the basis that it is intended to bias voters against the initiative.  Last week, the Superior Court rejected Reed’s challenge to the Attorney General’s summary language because the Court said Reed failed to prove that the ballot summary was “false, misleading or biased.”  In light of the Court’s ruling, Reed stated that he would no longer seek to have the initiative placed on the ballot in 2014.

Supporters of organized labor, who viewed the measure as scapegoating government workers and a violation of the requirement that employers must bargain about such changes, hail this turn of events as a success.

By Jake White | March 17, 2014

Legal Developments