E-News Blast for the Week of Dec. 14th
City Council “Tentatively” Approves Budget Cuts:
On Monday, December 14th, the City Council voted once again to approve Mayor Sanders’ proposed 18-month budget plan. The budget closes a projected $179 million deficit through a combination of one-time savings, service cuts and the elimination of hundreds of employee positions, both filled and vacant.
Thank you very much to those who worked with us over the past two weeks to lobby the City Council, including those who presented incredibly compelling testimony. Many of the proposed layoffs defy common sense, especially those Police Department civilian positions proposed to be completely eliminated. Unfortunately, and perhaps not surprisingly, it appears the budget was essentially a “done deal” the day it was publicly proposed by the Mayor, which was quite evident when only minimal changes were recommended by the City Council.
However, as a result of MEA’s challenge to the budget-approving process, the City Attorney and Council agree that final budget approval is contingent on the completion of a good faith “meet and confer” negotiation with MEA and other unions on the proposed cuts. What that means is that, despite the City Council’s vote to approve the budget, the positions targeted for elimination have not yet been cut, and the City cannot layoff any employees until we are finished with the meet and confer process. This process may take anywhere from a few weeks to a few months, depending on the department and the issues that need to be negotiated.
One of the purposes of these negotiations is for MEA to propose alternative cuts and/or revenue increases for the City to consider in place of the layoffs. This is a very difficult challenge because any revenue increases appear to be non-negotiable with our City leaders at this time, and finding alternative cuts only means transferring pain from one department to another and from one employee to the next.
Yet we are hopeful we can work with the City to find viable alternatives in some areas and can demonstrate the necessity of restoring a small number of the filled positions targeted for elimination. The bottom line is that we will continue to work as hard (and strategically) as possible to make something happen in the meet and confer process.
This is a painfully unjust situation—so far—for many of our employees, and we will continue to work tirelessly for a different outcome in the coming weeks and months. As always, do not hesitate to contact your representatives at MEA at 619-264-6632 if you have any questions or need more information on how the proposed budget might impact you or your department.
SDCERS Board Set to Approve Change in DROP Interest Rate:
On Friday, December 18th, the Board of the San Diego City Employees’ Retirement System will consider a recommendation from its staff to reduce the DROP interest crediting rate from 3.54% to 2.9%. The DROP annuity rate will remain unchanged at 5%. Please see the staff report from SDCERS https://board.sdcers.org/sirepub/cache/2/25l0xfejj3dnlu45rzdmvyec/1372712152009090554353.PDF for more information on what the Board will consider on Friday.
This year another City union took this matter to Court, arguing that the City did not have the legal authority to change the DROP interest rate. The Court rejected that challenge and ruled that SDCERS and the City of San Diego do have the legal right to make these changes.
MEA has and continues to argue that the DROP interest rate should equal the assumed rate of growth to the pension fund (currently 7.75%). However, as a practical matter the SDCERS Board does have the authority to independently set the DROP interest rate differently. Earlier this year the Board voted to set the rate at the weighted average of various interest rate measures, which now point to a rate of 2.9%.
If you are currently in DROP or are considering entry into DROP and want to know how this decision might affect you, please contact SDCERS staff at 619-525-3600 or your MEA representative at 619-264-6632.
Important Message from MEA Attorney Ann Smith:
Yesterday, City Attorney Jan Goldsmith issued a press release entitled: “Judge Strikes ‘Presidential Leave’ Pension Benefits.” This is in reference to a recent ruling in a case filed by the POA over the presidential benefit/leave issue that also affected MEA’s past president, POA’s three past presidents and Local 145’s past president. The City Attorney suggests that this ruling may create a means for the City to challenge other pension benefits and, predictably, Councilmember Carl DeMaio has seized upon that misguided conclusion to suggest that this ruling will pave the way for so-called “pension reform.” This assessment is the product of politics and not a reasoned legal analysis regarding this ruling and its likely significance.
In the POA’s case, Judge Taylor issued a ruling sustaining the City’s attack on the Complaint (called a “demurrer”) and gave POA no leave to amend. The result is that Judge Taylor’s ruling ends the case and the POA must seek relief in the appellate court. However, it is unusual for our courts to sustain this type of attack when no opportunity for a full evidentiary record has been given—a fundamental aspect of due process—and where the Court essentially jumped to a number of conclusions (without getting or considering all the relevant evidence) and also resolved a number of disputed “factual” issues (including ones involving equitable principles) which should not be done on demurrer.
MEA’s litigation on the same Presidential Benefit/Leave issue is pending before Judge Charles Hayes who rejected the precise same arguments the City made in the POA case. Instead, Judge Hayes has ordered the development of a full evidentiary record so that the issues can be briefed for the Court’s careful consideration.
In fact, the outcome in the POA case and how the City intends to misuse and exploit it to promote its broader pension “take-away” strategy underscores how right MEA’s Board of Directors was in seeing the continued importance of this Presidential Benefit/Leave litigation in the overall battle to protect the legitimate interests of all MEA-represented employees and in authorizing me to continue this litigation fight with the City and SDCERS.
Given the weakness of the ruling made in the POA case and its open and obvious flaws, it will most assuredly not be the last word on the issues actually involved in the POA case. Moreover, it is fanciful to suggest that this ruling will have any meaningful applicability to any other pension litigation. Nothing written by Judge Taylor in the POA case will trump or undo the resounding loss the City has suffered in its pension “take-away” claims which Judge Barton dismissed. The City’s appeal of this loss has not yet been heard.
Finally, it should also be noted that, not only did the City make pension agreements that it now attacks and seeks to undo, the City Attorney’s Office itself actually approved the Resolution as to “form and legality” which the City attacked in the POA case, and the City Attorney later confirmed in writing to SDCERS that the Resolution was the proper and enforceable means to accomplish what the City Council had voted unanimously to accomplish in terms of the presidential benefit/leave issues and that a separate, additional action by Ordinance was not needed.
More than three decades ago, our California Supreme Court asked: “What integrity would be left in government if government itself could attack the integrity of its own agreement.” I suspect we might agree on the answer to this question when it comes to the City of San Diego.
Best regards, Ann
MEA’s Offices Closed for the Holidays:
MEA’s offices will close at noon on December 24 and will re-open on January 4. If you have a workplace emergency or need help with any time-sensitive issue, please don’t hesitate to contact our office voicemail system at 619-264-6632 to hear emergency numbers to call during this furlough period. We wish you and your family all the best during this holiday season and look forward to continuing to serve you in the New Year!