The cost of California’s public pensions is rising fast. Solving the problem by ballot measure is a hard road
More than 20 times in the last 15 years, political leaders looking to control California’s fast-growing public pension costs have tried to put reform initiatives before the voters.
None of the proposals has made it onto the ballot.
Often, advocates could not raise enough money for signature gathering, advertising and other costs. Some of the efforts, however, ran into a different kind of obstacle: an official summary, written by the state attorney general, that described the initiative in terms likely to be unpopular with voters. Facing bleak prospects at the polls, the sponsors abandoned the campaigns.
Taxpayer advocates contend that the attorneys general — Democrats elected with robust support from organized labor — put a finger on the scale, distilling the initiatives in language that echoed labor’s rhetoric.
Labor leaders and their Democratic allies say the summaries were neutral and accurate, and that the problem lay with the initiatives — which, they contend, would have diluted benefits already promised to public employees.
The attorney general’s title and summary, which appear on petitions and in the official voter guide, can powerfully shape attitudes toward a ballot measure. The language has emerged as a battleground between those seeking to overhaul California’s public retirement system and those determined to defend it.
“It’s the one thing every voter will see, and it’s the last thing every voter will see,” said Thomas W. Hiltachk, a lawyer who specializes in California initiatives and has run campaigns in support of Republican ballot measures, including some targeting public pensions. “Whether you have a well-funded campaign or an underfunded campaign, those words are critically important.”
Retirement benefits are the fastest-growing expense in many municipal budgets. In Los Angeles and other cities, they account for 20% or more of general fund spending. The burden has pushed some cities to the edge of bankruptcy.
Yet a string of court rulings, known collectively as “the California Rule,” has posed a formidable barrier to change. It prohibits cuts in pension benefits already granted or promised. Under the rule, pensions are considered binding contracts protected by the state Constitution.
For that reason, many of the cost-saving measures passed by the Legislature in recent years, including later retirement ages and smaller monthly pension checks, did not affect employees already on the payroll. They applied only to newly hired workers. As a result, the savings will not kick in for many years.
Pension reform advocates say that achieving real relief in the near term will require reductions in benefits already granted to current employees. Because of the California Rule, that can be done only by amending the Constitution. And that requires a ballot initiative.
A wide majority of California voters surveyed have favored changing the pension system to save money. Support drops sharply when the change is framed as reducing benefits for teachers, police and firefighters.
That’s why the attorney general’s choice of words is so important. By law, the title and summary “shall be true and impartial” and not likely to “create prejudice for or against the proposed measure.”
Disputes over the language have figured prominently in several major reform attempts. The most recent, in 2013-14, was led by then-San Jose Mayor Chuck Reed and former San Diego City Councilman Carl DeMaio.
Reed, a Democrat, and DeMaio, a Republican, proposed a constitutional amendment to alter the California Rule by targeting future benefits of current employees. Workers would keep retirement benefits they had earned, but future benefits would no longer be guaranteed; they would be determined through collective bargaining or public referendum.
A survey conducted for labor groups opposed to the initiative found that majority support for pension reform collapsed if it was described as “eliminating police, firefighters, and other public employees’ vested pension benefits” or “eliminating state constitutional protections.”
The word “eliminate” “fosters a visceral negative response from voters,” according to a memo by the labor coalition’s Washington pollsters.
The Sacramento Bee published an article about the memo in December 2013. Three weeks later, then-Atty. Gen. Kamala Harris issued her summary of the initiative.
It said the Reed-DeMaio measure “eliminates constitutional protections for vested pension and retiree healthcare benefits for current public employees, including teachers, nurses, and peace officers, for future work performed.”
Reed and DeMaio sued the attorney general, accusing her of modeling her ballot language on the labor survey. The suit suggested an alternative summary: “Amends California constitution to allow government employers to negotiate with government employees to modify pension and retiree healthcare benefits for future work performed.”
In response, Harris said her summary was accurate and fair. “Voters may or may not like the idea of eliminating vested pension rights for public employees … but that is what the measure does and voters should be told,” Harris wrote in a court filing.
A Superior Court judge in Sacramento dismissed the suit, ruling that on each of the initiative’s key points, there was “nothing false or misleading” about Harris’ summary.
Reed and DeMaio dropped the initiative in March 2014.
“I personally didn’t think she would be so obviously, egregiously negative,” Reed, now special counsel at Hopkins & Carley, a Silicon Valley law firm, said of Harris.
Harris did not respond to requests to be interviewed for this article.
She was elected attorney general in 2010 with strong financial support from labor: more than $600,000 in donations to her campaign and to independent expenditure committees, according to the National Institute on Money in State Politics. She raised a total of $7.5 million that year.
Harris received an additional $400,000 from labor for her 2014 reelection effort, and she collected $73,102 from public employee unions in her successful $14-million campaign for the U.S. Senate last year.
Steve Maviglio, a spokesman for Californians for Retirement Security, the labor coalition that opposed the Reed-DeMaio initiative, said the campaign contributions to Harris don’t prove anything. He said the labor survey indicated that the initiative would lose “regardless of how the ballot language is written.”
Maviglio said recent pension initiatives have simply been too extreme for voters to support. “I think that’s just a lame excuse for their political malpractice,” he said.
The Reed-DeMaio measure marked the second time Harris had approved summary language that proponents of pension reform regarded as unfair.
California Pension Reform, a Republican-led advocacy group, proposed an initiative for the 2012 ballot that would have reduced benefits for both current and newly hired public workers. It called for imposing caps on how much government employers could contribute toward workers’ retirements.
The attorney general’s summary stated that the initiative “eliminates constitutional protections for current and future public employees’ vested pension benefits.”
California Pension Reform dropped the initiative, asserting that the “false and misleading title and summary make it nearly impossible to pass.” Harris’ office rejected the criticism, saying the title and summary accurately described “the initiative’s chief points and purposes.”
Dan Pellissier, president of the advocacy group and a former aide to Assembly Republicans, said there wasn’t enough time to challenge the attorney general in court and still collect enough signatures to meet the ballot deadline. He said the summary was unfair because it stated as fact that pension benefits are constitutionally protected when the issue is in dispute.
One of Harris’ predecessors, Democratic Atty. Gen. Bill Lockyer, was accused of writing politically charged language for a pension measure in 2005. The initiative, proposed by then-Gov. Arnold Schwarzenegger, would have given future state workers 401(k)-style retirement accounts instead of traditional pensions.
Schwarzenegger said in his State of the State Address that year that California’s pension obligations had risen from $160 million in 2000 to $2.6 billion, “threatening our state.”
But the Republican governor abandoned the initiative in April 2005, after Lockyer’s office issued a title and summary that said the measure would eliminate death and disability benefits for future public employees.
Schwarzenegger’s initiative did not mention death benefits. But the governor’s advisors appeared to have overlooked a key detail: death and disability benefits were tied to guaranteed pensions. Newly hired civil servants, who wouldn’t have such pensions, wouldn’t have the associated benefits either, unless they were provided separately.
Opponents of the measure seized on the issue and mobilized widows of slain police officers to speak out against Schwarzenegger’s proposal.
Schwarzenegger said at the time that he would never eliminate police death benefits, and that Lockyer had misinterpreted the initiative.
The governor’s communications director, Rob Stutzman, suggested that the attorney general was trying to curry favor with labor unions to mount a possible bid for governor.
Lockyer, now a lawyerin Orange County, said his staff’s analysis of the Schwarzenegger initiative was correct. “They complained about it, but it was a lot of political whining,” he said.
Jon Coupal, president of the Howard Jarvis Taxpayers Assn., which backed Schwarzenegger’s proposal, disagreed. He said nothing in the initiative would have prevented death and disability benefits from continuing. “They created ambiguity out of whole cloth,” he said.
Reed and other proponents of pension reform plan to put a new measure on the ballot next year. If they do, the title and summary will be written by California’s new attorney general, former U.S. Rep. Xavier Becerra, a Democrat from Los Angeles.
Becerra was nominated to serve the remainder of Harris’ term after she was sworn in as a U.S. senator in January. During his confirmation hearing, Becerra was asked about the attorney general’s obligation to write neutral summaries for ballot measures.
“I understand the importance of a word,” he said, adding: “The words I get to issue on behalf of the people of this state will be the words that are operative for everyone.”
After his confirmation, during his first news conference as attorney general, Becerra addressed the issue again. He said he recognized the need for “fiscally sound” pension policies, but added that his father was a retired union construction worker, with a pension.
“Do I want to see someone like my father be told that he’s not going to get what he bargained for?” he said. “You drive on the roads that my dad built. I think anyone who works hard deserves to get what they bargained for.”
Judy Lin is a reporter at CALmatters, a nonprofit journalism venture in Sacramento.
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