Mayor Reed Asks Unions for Feedback on Statewide Pension Reform Plan

After launching a statewide ballot initiative to scale back pension benefits for public employees, San Jose Mayor Chuck Reed reached out to union leaders, suggesting an open dialogue in the process.

Jon Ortiz, who runs the Sac Bee’s state worker blog, wonders if the invitation was shrewd, naïve and/or insincere.

In a letter to the California Teachers Association and a dozen other public worker unions, Reed explains why he and other mayors created “The Pension Reform Act of 2014,” which would grant local governments the right to negotiate existing workers’ future pensions and retiree healthcare benefits. 

“As mayors, we have seen firsthand how the rising cost of public employee retirement benefits has forced cities, counties and other government agencies to cut public services lay off hard-working employees and defer badly-needed improvements to critical infrastructure,” Reed writes in the Oct. 26 letter.

That’s not the fault of public employees, Reed adds, but of elected officials—including himself.

“In most cases, unfunded liabilities are the result of elected leaders making promises to their employees they cannot afford to keep,” he writes. “However, the system is simply unsustainable and we believe that it is unfair to our dedicated public servants to continue down this path.”

He signs off by inviting union leaders to contact him if they’re amenable to a meeting. Unlikely.

Reed’s been at odds with public employee unions since he convinced 69 percent of San Jose voters to pass a municipal pension reform measure in 2012. Measure B was challenged the get-go, launching 10 lawsuits that challenged, among other things, the constitutionality of altering contractual agreements regarding pension pay.

Reed’s Measure B reforms in San Jose ask city workers to chip in 16 percent more of their take-home pay into their own retirement. It bumped down new hires to a lower benefits tier moving forward and gave current employees the option of dialing down to the lesser, second-tier pension package.

San Jose clocked $3 billion in unfunded pension and healthcare liabilities this year. Pension payouts siphon off 20 percent of the General Fund budget, according to city officials. As is, pension funds don’t accrue enough revenue to pay liabilities, Reed says. On the flipside, workers don’t contribute enough to cover the cost and the city can’t keep up with the cost of so many of its workers retiring early.

The arguments against Measure B say you can’t take back an employee’s “vested rights,” or what’s already been promised. Pension, even if it hasn’t been paid out yet, counts as something already earned, explains CalPERS, which has $265 billion in assets, making it the largest public employee pension fund in the US. Pensions are earned, but defined as deferred compensation, and therefore pensions are protected under the state constitution. San Jose, however, has its own pension plan and is not part of CalPERS.

“The courts have clearly established that California employees have a vested right to the level of benefits promised to them when they are first employed,” CalPERS Deputy Executive Officer Robert Udall Glazier said after Reed filed for his state initiative. “This prevents not only a reduction in the benefits that have already been earned, but it also prevents a reduction in the benefits that an employee has been promised for their future service.”

It doesn’t help Reed’s goodwill gesture that he’s sought help from a shady ex-Enron billionaire, John Arnold, and a “vulture fund” led think-tank to rally support for the state ballot measure.

Jennifer Wadsworth is a staff writer for San Jose Inside and Metro Newspaper. Email tips to jenniferw@metronews.com or follow her on Twitter at @jennwadsworth.

23 Comments

  1. “Reed’s been at odds with public employee unions since he convinced 69 percent of San Jose voters to pass a municipal pension reform measure in 2012.” Jennifer, this is not accurate – it was 69 percent of the 15 percent of registered San Jose voters who bothered voting.

    • It is accurate. San Jose voters are the people who voted. The rest are just people in San Jose. Don’t blame the writer because the other “85 percent” were either too lazy or apathetic to go to the polls.

      JK

      • Josh,
        Technically, you are correct. I think it is misleading though when the media reports 69% of San Jose voters voted for Measure B, as the lazy masses assume that is 69% of the entire body of registered voters, when in fact, as you pointed out, 85% didn’t bother to vote. I hope the 85% that didn’t bother to vote can see the damage they allowed to be done by the politicians and a small handful of people that bothered to vote.

      • Ok now we know where this media group stands on the subject. So, the next time anyone at the Metro Group thinks its time to discuss “voter turnout” disenfranchisement, the need to get more folks registered on the rolls to vote and be heard remember your sentiment.

        See, it does matter and it is absolutely pertinent. It is a HUGE part of election strategy to put candidates , propositions and ballot measures on election ballots based on predicted voter turnout.

        That was the NUMBER 1 reason why Reed and the Measure B campaign put “b” on the ballot when it did. How many times did that it was “Now or never”???

        Off year local election   expected LOW TURN OUT which as a rule equates to turnout by only the most dedicated / die hard vote casters: CONSERVATIVES who, GUESS WHAT: OVERWHELMINGLY SUPPORT PENSION REFORM. 

        (also posted on the MW Fb page because SJI doesn’t like to publish opinions that run counter to their own NK – Not Kidding)

        • Reed is such an egomaniac! This is all for The media. if this was for real , then where was the this attitude when dealing with San Jose’s workers?? This guy is the biggest *!@#$# , he has destroyed San Jose and now along with his corrupt backers wants to destroy California . Feedback, what a joke . This Mayor only listens to the voices in his head.

  2. Mayor Reed wants to have an open dialogue about as much as I want a bullet in my head.  Look how much open dialogue he’s had with the employees of San Jose in the past when it comes to pension reform, soundly rejecting every offer from every union.  This is not a naive move, simply a PR stunt so that to the uninformed it looks like he “tried” to come together with the unions on his ballot initiative. 

    Just look who he’s teaming up with.  John Arnold, a man who made his money by screwing over thousands of Enron employees, and Paul Singer, another man who’d like to keep the rich richer and the middle class shrinking. 

    This measure will invalidate the decisions of the California Supreme Court, a slippery slope in my opinion.  Just like Measure B, which Reed knows will probably fail to pass muster in the courts, just because people vote on something doesn’t make it legal.

  3. Josh makes a very valid point. While voter turn out was incredibly low, the majority of those who voted, voted in favor of Measure B. Now it is up to the courts to decide if Measure B is even legal.

    I honestly think it is time to bring in a mediator who can work with both sides. Too many people on all sides of this issue are getting hurt from this stand off.

    Crime has increased, our Police Officers are exhausted and at risk of death or injury due to staff shortages, moral is low, services are being cut, and citizens are taking the brunt of it.

    Both sides have valid points and concerns, so a little good faith/will would go a long way to resolving this in a mutually beneficial way.

    • I’m not inclined to feel too sorry about our overworked police officers.  If the POA wants to encourage its members to leave, then the remaining membership has more than a share of the blame for their situation.

      At some point everyone needs to stop living in the past and start living in the here and now.

  4. S Randall no one cares what you or the mayor believe. You are a FOOL if you believe new recruits who worked so hard to get hired just quit because the bad “union” told them
    so… Are you really that clueless or perhaps you believe, like daddy chuck, that if you keep lying people will just believe. The recruits were lied to up until week 15 of academy. The union did what it was supposed to. Give the facts to its members and future members. Jennifer schembri and Alex gurza are liars! Deal with the facts. These are not stupid little kids. If one of these officers is injured on duty shot, hit by car, stabbed or are stuck with an HIV needle they have no safety net under 2 tier. They have 1 year to get better or get out. This along with the lowest pay make you wonder if they should have passed the psych to work here under these conditions until they’re 60 years old. Quit spewing your tired Reed lies. No one is listening anymore.

    • Either the POA is encouraging cadets to leave or it isn’t.  If it isn’t, why does the POA’s president say that it is?

      Nearly half of the San Jose Police Academy’s new graduating class plans to leave for other departments, according to union leaders. And until the city offers a better disability plan to new police recruits, the Police Officers Association (POA) says it will continue encouraging cadets to find work elsewhere.
      .
      .
      Unland says the POA shouldn’t be blamed for the continued exodus of officers, even if the union is encouraging people to leave.

      http://www.sanjoseinside.com/news/entries/10_21_13_san_jose_police_academy_union_jobs/

      • Some how you feel that the job of the POA is to protect the interest of the city when in fact the job of the POA is to protect the interest of the individual officer. The officers/members pay the POA to do just that. If the POA fails or refuses to do the job they were paid to do could possibly open up a door to be sued. If I were an officer I would want to know all my options in order to make a sound decision about what was best for me. The POA is doing the job the members pay them to do.

        • I never said anything about the city.  This is what I wrote:

          I’m not inclined to feel too sorry about our overworked police officers.  If the POA wants to encourage its members to leave, then the remaining membership has more than a share of the blame for their situation.

          You are shorthanded, and seem to be actively working to keep things that way.  You haven’t refuted that.  In fact you (collectively) seem to repeat that every chance you get.

      • OK it is true, SJPOA IS encouraging employees to leave the City’s employment.

        Tell us why they should be encouraging people to stay?

        The sophomoric “because they are public servants” or “because it will prove that they are the altruistic heroes they claim to be,” hogwash won’t cut it.

        What is wrong with encouraging people with a specific skill set that is in high demand to seek jobs with local employers who ARE paying on average more than 20% (Gross/Net/total comp or friggin cheerios) MORE than the City of San Jose?

        What is wrong with encouraging people with a specific skill set that is in high demand and where there is a very strong chance that a person performing a job with that skill set will become injured (injury ranging from a paper cut that ends up with full blown MRSA/Staph to DEATH) in the line of duty to seek jobs with employers who are willing to take care of that person until DEATH rather than simply fire them if they cannot return to full duty with in one year?

        If you worked for a private sector company and could take your skills somewhere else for more pay to support yourself and family wouldn’t you? 

        (posted to the MWFb page lest SJI conclude this is a personal attack on srandall and sends my questions to the SJI black hole)

        • I don’t expect police to be altruistic heroes.  The flip side to that is that when people stop expecting police to be altruistic heroes, then they will stop treating police like altruistic heroes.

          If you encourage people to leave, then a direct consequence is that the remaining people will be overworked, and their jobs will get more dangerous.

        • It is the Unions job to protect its membership and believe it or not , it better for the new employees to work elsewhere. San Jose is lowest in Pay , lowest benefitted ,  Zero Disability plan for those injured doing their jobs. Please explain why any one would work here when they can go else where and earn a competitive wage. its obvious you don’t care about those providing public safety , you just want their jobs done period. well guess what most of those employs have families, mortgages and bills. how could you survive paying 46% of your salary into your own pension and increased benefit payments? Everyone has the right to work where they choose to go , not be trapped by an Unscrupulous Mayor and Council. This City is getting exactly what it deserves

        • The job is dangerous to begin with. Any sense of altruistic duty left the building with the passage of B, W and V.

          Officers who remain fully understand that fewer officers can increase the risk and danger they face and the public is feeling the fallout from the common sense solution to the risk problem: They just don’t respond until they feel they have sufficient resources available to mitigate some (no way to eliminate all…) risk and danger.

          Calls for service pend , response times have gone through the roof and many calls that officers routinely responded to go untended. The result is the public is a greater risk, the public’s property is damages or stolen and criminals go undetected and get away unscathed. The public was warned this would happen, folks said the warning was just “union thug threats.”

          Now that officers are leaving for better pay your mad?  You feign concern over safe working conditions? Don’t worry about working police working conditions, worry about yourself and your family’s safety and what plan “b” is when you call 911 and help is an hour or more away and you have exhausted all your home defense supplies…remember you still will expect your police department to investigate and bring the responsibles to justice.

        • I think a lot of what you are doing is counterproductive.  For instance, what was the point of that last paragraph?  Do you really want people to start thinking that they better plan on fending for themselves?  Do you really want to throw the open carry crowd more red meat?

        • s Randall:
          You attempt an open dialogue, but you counter attack any position taken by those who support public safety.  Altruistic intention by MOST of those in public safety was (i am quite sure) one of the most important things about wanting to be in the Police or Fire Departments in the first place.  You act as though the Police and Fire Departments have abandoned everyone, and that our intention is to do harm to those who have voted to take our pay, our retirement and our security.  Yes, there are hard feelings, but our “altruistic” values do not allow us the luxury of work slow downs, strikes, or abandoning the oaths we took.  Unlike the private sector, the rank and file have a sworn obligation to do their job….no matter how much it costs us.  What is so wrong about cautioning younger candidates about the people they will be working for?  Because you seem to be one of those people.  Would YOU want to work for you?  We have that right, and we have the right to tell them the truth with ACTUAL numbers.  No ones “off the top of our heads”.  The simple fact of the matter is, if Measure B passes….any officer or firefighter living in the City Limits now, will not be.  46% of your entire income?  For what?  You are already not competitive for new hires, now you intend to make it worse?  You have been lied to by the puppet master; and bought it hook, line and sinker.  Maybe you should try the alternative route of information by reading the Billy and the Spanner, Save San Jose, or any other Police and Fire publication for a different perspective.

  5. Measure B cannot be mediated, it would have to go back to the voters and over turned.  The city will not even agree to giving the a tiny pay raise, forget about giving back the 10% cut public safety gave to the city to still see layoffs.

  6. I’d be happy to give Chuck Reed my feedback. It would consist of two words, the second of which would be “you.”

  7. Don’t look now but Reed just got a present from Detroit..

    Detroit Eligible To File Chapter 9; Pension Haircuts Allowed Bankruptcy Judge Rules