Election Day Assessment

Several measures affecting public sector labor relations were at stake in Tuesday’s election. Here’s a look at what happened:

City and County of San Francisco

Voters in San Francisco had to choose between two pension reform measures: Measure C and Measure D. The former was expected to save $1.3 billion over the next decade while the latter would save $1.7 billion. Measure C was supported by Mayor Ed Lee who had negotiated the measure with city unions.  Measure D was backed by public defender Jeff Adachi and opposed by city unions.  Measure C passed with 68.68% of the votes cast.  Measure D lost, garnering only 33.92% of the votes cast.

Some newspapers have characterized the vote in San Francisco as a mandate from voters to “cut generous public employee pensions.”  Perhaps.  But I think any fair analysis of what happened in San Francisco has to take into account that Measure C was actually negotiated with the unions—and thus supported by the unions.  Although Measure D was a competing measure, the opposition to Measure C was virtually non-existent.  In my mind, the passage of Measure C just affirms that many voters (especially in labor-friendly cities like San Francisco) like to see consensus measures on this divisive issue. For example, it’s worth noting that 45,000+ people signed the measure to get Measure D on the ballot, yet Measure D only garnered 50,000 votes in the actual election.  That means that either Measure D supporters simply stayed home or there were quite a few people that signed the petition to get Measure D on the ballot only to vote for Measure C on election day.

City of Palo Alto

At issue in the City of Palo Alto was Measure D, which called for the repeal of binding interest arbitration for city police officers and firefighters.  Despite a reported $71,000 campaign by the firefighters (census data pegs the population of Palo Alto at around 60,000 people), the measure passed with 67.3% of the votes cast.  Palo Alto now joins Vallejo, Stockton, and San Luis Obispo in having repealed its binding interest arbitration rules within the last two years.

Prior to the election the firefighters’ union had filed an unfair practice charge with PERB alleging that the city failed to meet and confer with the union prior to placing the measure on the ballot.  A proposed decision is expected from the PERB ALJ any day now.  In my humble opinion, there is clear case-law establishing that binding interest arbitration provisions are not a “mandatory” subject of bargaining and therefore the city didn’t have to meet and confer with the union prior to placing the measure on the ballot.  (Disclaimer: Our firm represents the city in the PERB case so I’m not unbiased). Given that Measure D won overwhelmingly, I’m not sure what the union has to gain by continuing to pursue its unfair practice charge.  Even if the union won, that just means the city has to go through a meet and confer process with the union before placing the measure on the ballot.  Given the recent results, I don’t think anyone believes the vote would be any different if held in a June 2012 election.  Quite frankly that might just annoy the voters…

City of Modesto

Three measures were at issue in the City of Modesto: 1) Measure Q (moving from defined benefit plans to defined contribution plans); 2) Measure R (moving from single highest year to a three-year average for the baseline salary used to calculate pensions); and 3) Measure S (increasing age for retirement).  All three measures were advisory only.  All three measures passed; the measures received 57.79%, 74.54% and 63.09% of the votes cast, respectively.

I was a little surprised that Measure Q only passed with 57% of the vote.  What’s even more interesting is the argument used by opponents of Measure Q in the voter’s pamphlet.  Instead of trying to defend defined benefit plans, the opposition argued against the measure by citing to the high costs of leaving the CalPERS system. It’s certainly true that there is typically (especially given recent market loses) a cost to leaving a defined benefit system, but it certainly is less than continuing with the status quo.

Looking Ahead …

The Modesto and San Francisco ballot measures may be part of a trend, as San Jose is currently in negotiations with its labor unions over changes to pension benefits, some of which may require voter-approved changes to the City Charter.  However, more interesting may be voter-initiated changes like Menlo Park’s pension reform ordinance, which was passed by the voters in 2010 and is currently being challenged by SEIU and AFSCME.

In addition, as most of us have heard, just days after the Governor released his 12-point plan for pension reform, a pension reform group led by Dan Pellissier filed two versions of a pension reform initiative with the Secretary of State. It should be an interesting year in
pension reform…

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