Reed/DeMaio Initiative Cleared for Signature Gathering

Aaron Read and
Randy Perry

Legislative Advocates

Aaron Read & Associates, LLC

Picture it. Decisions about your retirement future and security made by a disillusioned and misinformed electorate. Employer contributions to safety employee retirement and retiree health care capped at 13%. Employers prohibited from paying more than half of the total cost of retirement benefits.

A scary scenario isn’t it? Well, as we have reported in previous months, former San Jose Mayor Chuck Reed and former San Diego City Councilman Carl DeMaio have submitted two pension- and benefit-slashing initiatives for the 2016 ballot that would create exactly those conditions for California’s public employees.

These two initiatives have now received their title and summary from the Attorney General’s office, as well as their analyses from the state’s independent Legislative Analyst’s Office. This means proponents now have less than 180 days (six months) to collect signatures to qualify the measures.

The good news is that a new Capital & Main/David Binder poll released this month shows early support for the initiatives at levels far below what proponents expected. It appears their pension-bashing rhetoric doesn’t have as much traction as they thought:

  • The measure eliminating defined benefit retirement for new employees tested at 42% support and 42% oppose.
  • The measure capping employer contributions for new employees tested at 40% support and 40% oppose.

In recent news articles, Chuck Reed has indicated that they will be conducting their own polling to determine which, if either, measure they will move forward. Successful initiative campaigns can cost tens of millions of dollars. While Reed and DeMaio could certainly have deep-pocketed benefactors waiting in the wings, with early polling numbers such as these, we hope their supporters realize that they are in for a massive fight.

PORAC has been preparing for such a battle for over a year, implementing a dues assessment to cover the potentially huge costs associated with such a campaign. If either measure qualifies for the ballot, PORAC and other opposition organizations will have to spend millions of dollars to defeat it and there will need to be a huge grassroots voter turnout effort.

It is critical that we start the discussions now, and our message is succinct. When talking about these initiatives, there are a few key points to stress:

  • These initiatives attack the core promise made to law enforcement that after a career of dangerous service to our communities, you will have a retirement check that you can rely on — a defined benefit. These initiatives eliminate the defined benefit and are both extreme and punitive measures that will hurt law enforcement officers and their families.
  • The first measure closes pension plans to new employees and prohibits employers from paying the costs of closing these plans. Once new hires are put into a new plan, the costs of existing plans, lacking new membership, will skyrocket and those costs will have to be paid by employees and employers, with the employer’s contributions capped.
  • The elimination of defined benefit retirement plans creates a hindrance to recruitment that would be incredibly difficult to overcome.
  • These measures eliminate retirement security for peace officers, firefighters, teachers and all public employees in California, while likely costing taxpayers billions of dollars for everything from increased expenses for death and disability benefits to increased payments for the pensions of existing employees.
  • The initiatives jeopardize the sustainability of our state’s multibillion dollar pension funds, thrusting public employees into financial uncertainty.

PORAC has already participated in extraordinary reforms that were initiated by the Governor, Legislature and cooperative public employees. Any further adjustments to retirement and health care benefits must be made only after thoughtful consideration at the bargaining table. Stay tuned for updates as proponents make their decision on how to move forward.

For your reference, when approached by signature gatherers, the title and summaries are as follows.

Public Employees. Pension and Retiree Health Care Benefits. Initiative  Constitutional Amendment. Amends California Constitution to impose restrictions on pension and retiree health care benefits for new public employees, including those working in K-12 schools, higher education, hospitals and police protection. Bars government employers from enrolling public employees hired after January 1, 2019, in defined benefit pension plans, from enhancing certain retirement benefits for such employees, and from paying more than one-half cost of such employees’ pension and retiree health care benefits, unless first approved by voters. Limits retirement boards’ ability to place financial conditions upon government employers that close defined benefit plans to new employees. Summary of estimate by Legislative Analyst and Director of Finance of fiscal impact on state and local government: Significant effects — savings and costs — on state and local governments relating to compensation for governmental employees. The magnitude and timing of these effects would depend heavily on future decisions made by voters, governmental employers, the Legislature, Governor and the courts.

Public Employees. Pension and Retiree Health Care Benefits. Initiative Constitutional Amendment. Amends California Constitution to impose restrictions on employer contributions toward cost of pension and retiree health care benefits for new public employees, including those working in K-12 schools, higher education, hospitals and police protection. Bars government employers from contributing amount more than 11% of an employee’s base compensation (13% for safety employees) toward cost
of pension and retiree health care benefits for public employees hired after
January 1, 2019, and from paying more than one-half cost of such new public employees’ pension and retiree health care benefits, unless higher portion is first approved by voters. Summary of estimate by Legislative Analyst and Director of Finance of fiscal impact on state and local government: Significant effects — savings and costs — on state and local governments relating to compensation for governmental employees. The magnitude and timing of these effects would depend heavily on future decisions made by voters, governmental employers, the Legislature, Governor and the courts.

Legislation

By the time you read this, the Legislature will be back in session at the Capitol. Body cameras, police oversight, guns and ammunition will be subject to new legislation. We will report more as new bills are introduced.