Ballot Measures Gut Pensions For San Jose and San Diego City Employees
On June 5, 2012, primary election voters in San Diego and San Jose approved deep cuts to pension benefits for city employees. Both ballot proposals reduce pensions not just for future hires, but also for current city employees.
Measure B in San Jose forces city employees to either keep their current pension by agreeing to contribute up to 16 percent of their salaries to the pension fund, or enter a plan with a higher retirement age, fewer benefits, and smaller cost-of-living adjustments. Future hires are put into a plan that costs less and requires employees to contribute up to half of its cost. The measure also allows San Jose to freeze pension cost-of-living increases for up to five years in a fiscal emergency.
Proposition B in San Diego eliminates pensions for new workers, who are instead shifted into a defined-contribution plan, similar to a 401(k) plan. Traditional pensions are preserved for new police officers.
Labor unions in San Diego and San Jose have filed court challenges seeking to block the cuts, arguing that they are illegal under California law and violate the vested rights of their members. Many employees were hired under the expectation that they would earn future pensions, at specified benefit levels, by staying at their jobs and making specific contributions to the retirement fund.
The California Supreme Court has previously ruled that public employees who have contributed to their retirement have a constitutional right to be free from unreasonable impairment of their pensions.
Author: Matthew Weisner
