Court Upholds San Diego’s 2012 Pension Reform Measure

Another important court decision has been handed down in the uncertain world of public pensions.

On Tuesday, a California appellate district court dismissed a lawsuit against the City of San Diego brought by the California Public Employment Relations Board. The court’s decision upholds Proposition B, a voter-approved initiative which eliminated defined pension plans for all new hires except police officers, replacing them with 401k-style plans.

Proposition B has already saved the city millions, but it was approved in the absence of any negotiations with labor unions. Because of the involvement of then-mayor Jerry Sanders, the California Public Employee Relations Board said that violated the collective bargaining rights of public employees. In its 66-page opinion, the three-judge panel unanimously disagreed.

Had Tuesday’s decision gone the other way, San Diego would have been the hook for defined pension benefits denied to city employees hired since 2012. A ruling in the labor board’s favor would have also created an “insurmountable hurdle” for pension reform efforts across the state, said former City Manager Jan Goldsmith.  

While Tuesday’s ruling is good news for California pension hawks, experts say the real battle will be waged over retirement benefits for existing employees.

Stay tuned.