Reform 4.14: Negotiated Settlement

Seek “Negotiated Settlement” on Pension Reform from City Labor Unions Using City Charter Section 143.1

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While this office has on multiple occasions suggested that an amendment to the City Charter section 143.1-employee vote requirement be explored 18,19 , this Charter section may also provide a unique opportunity to reduce the City’s pension liability. As familiarly triggered, the section provides members of the retirement system with an effective veto power over changes to benefit levels, despite the outcome of the “Meet and Confer” process.Charter section 143.1 states, in part, that: “No ordinance amending the retirement system which affects the benefits of any employee under such retire ment system shall be adopted without the approval of a majority vote of the members of said system.” In addition to the de facto veto power over benefit changes granted to system members, this provision may provide a unique legal mechanism for changing the benefits of existing employees – a pension reform typically viewed as “off the table” due to the nature of vested benefits. 20 As the fiduciary counsel for SDCERS has pointed out 21, “One of the premises of vested rights is that the contractual right is determined based on the terms of the contract at the time that the person began working. And in the case of that contract has included since 1954, the benefit vote provision section 143.1. Therefore, the vested rights to particular retirement benefits that are provided with and in the City of San Diego (the SDCERS plan) are all subject to the possibility of modification on the appropriate vote as to the members...What we addressed in our analysis is simply the active members’ rights to take away from themselves a benefit that was previously granted.” We reference this Charter provision to remind city labor unions that, according to SDCERS counsel, they can always utilize this provision to offer their own pension reform plan using Charter Section 143.1.

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Indicator:1

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