The Great Constant, Kalra Pension Debate

The much anticipated San Jose Rotary Club debate between Councilmembers Pete Constant and Ash Kalra did not disappoint. Both Constant and Kalra were spirited advocates for their positions: Constant defending Measure B, the pension “modification” measure; Kalra, a lawyer, presenting the views in opposition.

By the end of the debate, to the disappointment of many, it was Kalra who gained the most.

Let’s set the scene: Constant is a current member of Rotary and a crowd favorite. He is affable, charming and shares the moderate/conservative views of many members of the organization. Kalra, a past Rotary member, is more liberal and suspect for supporting organized labor on pension reform. Though it must be noted, Kalra spoke for himself and not for the anti-Measure B campaign.

The moderator, judge Arthur Weissbrodt, prepared specific questions for each protagonist. In truth, many felt the judge may have won the debate with his tough, but fair, questioning of both participants.

Constant began the debate with a recitation of the current fiscal problems facing the city and a plea to support the ballot measure, which he believes is legal and will solve the long-term financial problems facing the city.

Truth be told, Constant is the poster child for pension reform. As a former police officer who was disabled on the job, he receives a pension and benefits for life. He also draws a City Council salary. Under Measure B he would not be eligible for a disability pension despite the severe injuries he received as a police officer, because he is obviously still able to work at another job.

Kalra countered with a nod to the problem, then eviscerated the proposed solution advocated by Constant as unconstitutional, costly, unfair and unworkable.

In closing, Kalra asked whether Measure B passed the four-part Rotary test: Is it the truth? Is it fair to all concerned? Will it build goodwill and better friendships? Will it be beneficial to all concerned?

Kalra noted how Measure B was put on the ballot, its effect on current employees, and the fact that the issue already divides the city.

In the final analysis, the case law against the current proposal is overwhelming and despite a highly trumpeted Meyers Nave legal opinion that suggests the city may have an “argument” for Measure B; even Constant acknowledged it was going to court if it passed.

Which is fine by the lawyers at Meyers Nave, as Kalra pointed out, because they were paid to create the legal conditions for a fiscal crisis that was ultimately dropped. They were paid to write the ballot language, they were paid to argue the ballot title and summary arguments—which they lost—and they have been retained to argue the merits of the measure, should it pass, as it winds its way through our judicial system.

So the real winner of the debate may be the lawyers at Meyers Nave. They’re the only folks guaranteed to come out ahead on Measure B, win or lose.

Rich Robinson is an attorney and political consultant in Silicon Valley. He is currently working on the campaign of Sheriff Laurie Smith.

24 Comments

  1. Mr Robisnon, you are correct!
    The SOLE winner of not only the debate, but the subsequent court challenge, and settlement, will be the law office of MEYERS NAVE. Thanks Mr Greed and City attorney Doyle. I’ m sure you will enjoy working for your new employer in years to come. That’s the way it works right? You create a legal issue, generate litigation, then hire a colleague to collect the billable hours. Grateful colleague then rewards you with employment or compensation later.

    Textbook American politics right here in San Jose. Unfortunately, sheeple, cavemen, and lemmings run amok in this town even though they’re the ones who are going to be footing the bill to live in this Mayberry Town

    • Mr. Doyle did tell REED and CONSTANT that the measure would fail in court and that it was not legal. But when your boss is full steam ahead no matter what the cost, you do what you told. Ask CONSTANT he is good follower..

  2. At least the lawyers will make money on it!  Years of lawsuits with no savings is better than bargaining and working together to come up with a sustainable plan for sure!!!!

  3. - Profit.  The City pays Meyers Nave a very generous amount for general City Attorney services, but they must pay them by the hour for any litigation services.  This means that the more bad advice Meyers Nave gives the city, the more likely the city is to get sued, and the more money Meyers Nave will make in attorney’s fees.  Smart cities avoid this clear conflict of interest by having the City Attorney be an employee, and thus not personally benefit from any litigation.

    So what now? We can hope that the Citizens l will see reason, and will realize that what’s best for Meyers Nave is not what’s best for the City.   And we can urge these council clowns to get independent legal advice on this matter – from a firm not hired or recommended by Meyers Nave.

  4. I think it was great that this important public policy issue was debated in a somewhat civil debate that allowed folks to consider the issues at hand.

    Too often in politics, stuff is couched in campaign rhetoric and double-speak where the electorate is supposed to de-cypher the crap politicians are packaging and delivering to us.  At least in this case, we’ve had a reasonable debate before a crowd of interested folks who really want to try and figure out what the right thing to do is.

    At the end of the day, I tend to think we need to moderate the pension plans to mitigate their impact on the budget and its ability to fund basic services.  However I’m also empathetic for folks who’ve already put in 20 or so years and made life decisions based on pension promises.  I suggest an approach that allows for new hires to receive some pension benefits along with incentives to invest towards their own retirement, and early to mid-career workers to make choices for their retirement (switch to the modified pension/401k system and get more take home pay or stay with the defined benefit plan but exchange access to some pay check increases over time), but preserves benefits for those close to retirement.

    I also hope that those who take and receive the full pension benefit and remain in the local area might find some way to pay it forward in terms of community service or other volunteer type activities.

  5. Mr. Kalra claims he is for pension reform.  Where is Mr. Kalra’s pension reform plan?  Mr. Kalra says the city should continue talking with the unions.  After three years in office you would think Mr. Kalra would be able to present a clear and viable plan instead of just criticizing measure B.

    • The Unions want to work with leaders that are honest. Of course when Reed quotes 650 for a year and half and the real number is more like 245 the unions do not trust him …. Kalra is a leader we can trust. NBC has reported many lies by Reed, Constant and Figone.  The damage Reed has already done will take decades to fix.  Reed took over the safest city in america with a force of 1600 officers.  Reed said his first year the police dept was undermanned… GOOGLE IT if you do not believe me…  reed acknowledged we needed 600 more cops.  Now Reed has taken the police department down to under 1050 and the officer are leaving every week for better paid, better benefits, and better pension plans.  The millions needed to train new officers that will stay two years and then move away to another dept will become a cycle that will cost us all.

      Thanks Mr. Reed, Your legacy will be that you destroyed what was called by ABC News as the model police department.

      • ET Smokey Bear,

        As I asked, where is Mr. Kalra’s pension reform plan if he really is a leader you can trust?  Why did he not discuss his plan instead of using all his time attacking measure B?  San Jose residents want to see SJPD staffing restored but they have not heard from any of our so-called leaders how to make that happen.

        • Didn’t we just learn that CalPers has been manipulating its expected rate of return and faces large unfunded liabilities? Joining CalPers would make matters worse, not better.

        • One of the plans that Kalra supported was an alternative to Reed and Co’s “Ballot Measure B.”  The Police and Fire unions attempted to introduce an alternative measure at the 3-6-2012 City Council Meeting.

          The alternative measure was asking voters for authorization for Police and Fire to join CalPers 3%@55 retirement plan. The move would reportedly have saved the City $467million over the next 5 years. The Union/Kalra alternative was blocked from discussion when Councilman Pete Constant used a parliamentary procedure rule to bury it.

          As a footnote to this CalPers 3@55 plan alternative: Remember that Mayor Reed went to the Unions and said that Union concessions/recommendations had to save the City minimum of $500million over the next five years? It had something to do with preventing a Fiscal Emergency?…

          I know, I know: $467 is not $500 BUT, to get to the $500million number the Police Union agreed to accept the “ongoing 10% salary reduction” which guaranteed an immediate $30million in savings for the first year it was implemented not to mention what it would save in the out-years.  – and a footnote to the 10%: the Police agreed to the reduction anyway which immediately saved the City $30million and IS a significant factor in the projected budget surplus of $10million for the 2012-2013 fiscal year.

          Why didn’t the Mayor embrace the cost savings? Who knows, responsible citizens should demand an answer to that question. Everyone involved – the Mayor, the police, fire, Council, City Manager Figone, librarians and especially the taxpayers could claim victory and salvage relationships… 

          What Mayor Reed did was as despicable as it was characteristic of him – he acknowledged that he originally only wanted $500million in savings but was now requiring $800million in savings. He could not articulate the $300million increase – maybe because it came “off the top of his head.”

        • Didn’t we just learn that Mayor Reed lied the public by saying the SJ Retirement unfunded liability would be $650million by 2015 while reporting to the SEC and bond holders that it was only $245million?

          Didn’t we just learn that Mayor Reed and the Council ordered the Retirement Board’s actuarial (Cheiron) to use non-industry standard accounting methods to arrive at an exagerated unfunded liability estimate? 

          I think the CalPers issue is that the CalPers Board was using a “projected rate of return” that was a quarter of a percent higher than some faction that got a lot of press wanted them to use. The same thing only worse went on here in San Jose where the Retirement system Board and its investment advisors and arrived at something like an 8% rate of return on investments (while the fund was actually earning like 11-14%) – The Mayor and Council and wanted to cap projected return rates at 4%.

    • SteveO,

      Council Member Kalra said that the City should continue talking with the unions.  The latest reform proposal by Police and Fire was projected to save just under $500 million over the next five years (according to an independent actuary.)  But the City said it wasn’t enough, as the costs were projected to be $650 million.  Since we now know that the $650 million figure was off the top of Russell Crosby’s head, and the current forecast is actually a shortfall of about $300 million, the bargaining unit’s proposal goes almost $200 million beyond solving the problem.  Additionally, the City Manager’s own budge numbers published a few weeks ago show that the Police and Fire retirement costs are actually flat over the next five years.  http://www.sanjoseca.gov/budget/FY1213/01FiveYearForecast/Entire2012-13BdgtReq2013-17Five-YrForecast.pdf 

      Other cities and counties in the state have solved their pension funding problems by:
      •  Increasing employee contributions from 0% to 9 or 10%
      •  Increasing the retirement age from 50 to 55
      •  Reducing the annual accrual rate from 3% to 2.5%
      •  Freezing salary increases

      Before any reform, San Jose Police employees:
      •  Contribute 17% of their income to the retirement plan. That is slated to increase to more than 20% in July of this year, and it’s been as high as 23% in recent years
      •  Must have 25 years’ service and be 50 years old, or 20 years’ service and be 55 years old in order to retire
      •  Have an annual accrual rate of 2.5%
      •  Have taken a 15% compensation reduction over the last two contracts

      SJPD already has a retirement plan that is more costly to the employees, with a lower benefit, than virtually every other agency in the state.  And now we’re offering even more concessions.  Yet, Mayor Reed and his supporters would prefer to put their draconian proposal on the ballot.

      If I were to go to just about any Bay Area police department and work as a patrol officer, I would make more money, and have a better retirement package than I do at SJPD as a supervisor.  We are the lowest in overall compensation in the Bay Area, and far below average among Santa Clara County agencies.  Yet the hiring standards at SJPD are higher than many other agencies in terms of education, background, etc.  There is no way we can continue to attract high-quality candidates with our current compensation package, much less a worse one. 

      The real problem is that San Jose’s priorities are wrong.  San Jose spends approximately 50% of its general fund on Public Safety.  This is the lowest number in the country for cities with a population of 500 thousand or greater.  It’s much more common to see that number in the 65 to 75% range.  SJPD has the lowest number of officers per capita of any city in the country with a population of 500 thousand or greater.  If we had twice the number of officers we would still be among the lowest.

      How sad it is to see City leadership (to use the term loosely) destroy morale, devalue their employees, and decimate a once strong, highly professional work force. This has, and will continue to trickle down to a much lower quality of life for the residents of San Jose.

  6. How generous of you, Mr. Robinson, to characterize Pete Constant’s job-related injuries as “severe.” It is, I assure you, a diagnosis for which our now healthy appearing councilman invested a great deal of time and effort back in his SJPD days, peddling his well-rehearsed soft-tissue woes to the assortment of quacks favored by his worker’s comp attorney. Mr. Constant, by the way, won his disability only after assuring the board that he was physically incapable of performing any of the various light-duty desk jobs available. He immediately celebrated his disability by expanding his side-business as a professional photographer (a vocation that apparently requires no physical movement at all).

    Today Pete Constant sees nothing but doom in the Police/Fire pension system, but back when he decided his photography business offered him a better future than the cop biz, he didn’t opt to cash out and free himself of the pension system (a move which would’ve allowed him to invest a considerable sum of money into his business), he instead chose to leave his money in and put his faith in the pension system—the same system he now decries as fatally flawed. Think about it: rather than bet on himself when he had the chance, Pete Constant instead chose to bet his future on something he brands as fatally flawed! People, give credit where credit is due: the man knows his limitations.

    It is hardly surprising that a person whose personal brand of integrity allowed him to walkaway with benefits to be financed by the labor and risk of his former coworkers would be supportive of a scheme that advocates the breaking of legal agreements. Mr. Constant, like Mayor Reed and the other scoundrels—all of whom occupy positions of power based solely on the sanctity of legal agreements, are counting on finding in court a shared disdain for legal agreements that get in the way of grand political efforts. If that happens, then whatever be the consequences of their subsequent pension scheme will pale in comparison to the consequences of nullifying the legal protections of the very men and women who make our laws mean something more than just the paper upon which they’re written.

  7. Calpers is protected by law from modifications for existing employees by State Law. A fiscal emergency cannot be used to permanently alter Calpers by State law. The Fed insures defined benefit plans for Private companies unable to pay. The bankrupt City of Vallejo did not alter pensions as it was under Calpers and was under Federal receivership. The idea that if something is not radically done City employees will loose their pension has no precedent.

    The liability from the basic formula of 2.5% accrual per year with minimum retirement age of 55 and a maximum benefit of 75% of salary must be separated from all of the enhancements granted by Council to have a fair analysis. Such as guaranteed COLA of 3%, 13th check year end bonus, and the change to Public Safety employees granting 90% maximum benefit.

    The fact is, competent workers are drawn out of the private sector by the benefits, not the mediocre salary by Silicon Valley standards. To erase that will dumb down the workforce significantly. Pension contribution is currently a combined employee/City amount of around 50% of salary, a totally ridiculous figure to support the benefit. One would do better putting the money under their pillow. The investment strategy of the Pension managers has been severely flawed.

    Unlike the private sector, retirement investment is totally lost upon death of the retiree and spouse with the plan retaining the asset. Social Security is significantly reduced for pensioned municipal worker (with the exception of entities like the County of Santa Clara that wisely also pays SSI form each employee, giving a significant incentive to experienced private sector workers to move to public service).

  8. It is interesting that Councilman Licardo upon taking office identified the cause (not one of many) of the City’s budget problems as unbalanced land use. Mayor Reed ran on a singular platform of Sunshine. The union bashing team of Reed/Constant/Oliverio have suddenly identified a new scapegoat for decades of fiscal irresponsibility incurring huge dept service. Does not say much for foresight.

    During the great campaign for Measure B, the voter will not be appraised of the relatively small portion of their total tax bill allocated for municipal services. The predominant portion goes to Federal entitlements and the Military, the worlds largest employer.

  9. Profit.  The City pays Meyers Nave a very generous amount for general City Attorney services, but they must pay them by the hour for any litigation services.  This means that the more bad advice Meyers Nave gives the city, the more likely the city is to get sued, and the more money Meyers Nave will make in attorney’s fees.  Smart cities avoid this clear conflict of interest by having the City Attorney be an employee, and thus not personally benefit from any litigation.

    • there is the additional cost to the city in that it now has to pay the unions’ legal fees for fighting against the change in the ballot measure language.  the court of appeal awarded the unions their fees to be paid by the city! I wonder if the media will ever let the public know how much the city has spent to date in legal fees on the pension reform issue.

      • Have you noticed the SJMN has not published one single article about this ruling.  Chuck must love his relationship with the news.

        I beginning to wonder if they have influence with this site.  Some posts seem to be getting more negative about the unions and ballot measure.

  10. its good to see that even though you make people sign in , you still pick and choose , what you are going to print. you must be a supporter of the REED REGIME.this site has lost all of its credibility! ever wonder why you dont get the responses you used to

    • Not my experience. Its all relative, compared to KLIV this a balanced web site. Soviet style state run KLIV 1590 with its idiot commentator Robert Kieve is nothing but a Reed propaganda operation, with absolutely no representation of the opposing sides. Ever heard a union rep there. So I propose a City wide boycott of this pathetic excuse for News, worse that Fox, which is hard to do.