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2016 Pension Initiative

2016 Pension Initiative
In 2014, Former San Jose Mayor Chuck Reed attempted to qualify an initiative for the ballot that would severely impair and damage the traditional pensions of government employees.  After having destroyed the City of San Jose, Mayor Reed had hoped to bring the same level of damage to all of California.  He partnered with former San Diego politician Carl DeMaio and they eventually sent their initiative to State Attorney General Kamala Harris for a "Title and Summary" (the information normally provided to the voters).  Reed and DeMaio did not like the wording of the "Title and Summary" and chose to sue the Attorney General.  In court, they argued that the Attorney General's wording was prejudicial because it unfairly stated that the vested pension rights of police officers and firefighters would be impaired.  The judge ruled that the Attorney General's "Title and Summary" was accurate and legal.  The delay from the court process caused Chuck Reed to pull his initiative and wait until 2016 for another try.  Below is a chronological list of important events surrounding this initiative.  The most recent information is at the top.  

Dates in YELLOW highlight major changes in the process.  Click here to learn how the initiative process works.

NEXT DEVELOPMENT:  THE INITIATIVE IS DEAD .. THE AUTHORS PLAN TO BE BACK IN 2018

05/07/16   Chuck Reed Gearing Up For 2018 Statewide Ballot Initiative
01/29/16   (ADDA Blog) Three Strikes and They're Out 
01/25/16   Pension Initiative Refile Many Include Legislation
    Title and summaries were released on the two Reed/DeMaio pension initiatives. Polling tested both title and summaries and determined their initial support/opposition.  The Attorney General did a fair, but good job on both title and summaries.  Reed stated in the Sacramento Bee that "it's not the most positive way to describe the initiative, but at least it meets the legal requirement to be accurate".   We agree.   Based on previous polling we anticipate that neither will test at above 50% support.  Reed was also quoted in the Sacramento Bee that they need to start at 60% support to be viable, and need to raise $2-3 million for signature gathering and $25 million for a campaign.  If our polling projection is accurate it will add fuel to the argument that anyone funding Reed/DeMaio is wasting their money.
01/18/16   (LA Times) Backers to Hold Off on Pension Ballot Measure
01/18/16   PENSION INITIATIVE IS PULLED FROM BALLOT BY BACKERS
12/10/15   (Reuters) Pension Reform Measure Can Try for Ballot
12/10/15   (Sacramento Bee) Pension Overhaul Advocates Move Forward
12/09/15   Title and Summary for Initiative 15-0077 (Government Pension Cap Act)
12/09/15   Title and Summary for Initiative 15-0076 (Voter Empowerment Act)
11/24/15   Fiscal Impact of Initiative 15-0077 (Government Pension Cap Act)
11/24/15   Fiscal Impact of Initiative 15-0076 (Voter Empowerment Act)
10/07/15   Pension Reform Initiative Reworked
10/07/15   (OC Register) Pension Reform, Take 3
10/05/15   New Public Pension Proposals Target Future Employees
10/05/15   New Ballot Measures Unveiled by Reed and DeMaio
10/05/15   Wording of the Second Draft of the "Voter Empowerment Act of 2016"

   
  • Eliminates defined benefit (DB) pensions for new employees hired after January 1, 2019.  Employers could provide risky defined contribution plans, would not be required to contribute any amount towards employee retirement and could provide nothing at all.
  • Limits employer contributions to one-half the cost of retirement benefits.  Employers would not have to pay anything, but cannot pay more than half.
  • Prohibits benefit enhancements for employees or retirees in existing defined benefit retirement plans.
  • Prohibits employers from paying the increased costs related to closing existing retirement plans.  This means either the state would have to pick up the costs, or if funds go broke employees and retirees would have to sue to get their benefits paid.
  • Death and disability benefits would be impaired, because they are currently based on a DB plan.  If DB plans are eliminated, there is no way to provide existing death and disability plans.
  • Reciprocity is eliminated.  If a government employee changes employers they are treated as “new employees”.  A teacher changing school districts would lose their pension.  Same with all other employees.
  • Allows voters to approve defined benefit plans or increased employer contributions above one-half the cost of retirement benefits for new employees, or benefit enhancements for existing employees or retirees.
10/05/15   Wording of the New "Government Pension Cap Act of 2016"
   
  • Prohibits government employers from contributing more than 11 percent of base compensation for a new employee’s retirement benefits, or 13 percent for new safety employees, unless approved by voters of the jurisdiction.
  • Prohibits government employers from paying more than one-half of the total cost of retirement benefits for new employees, unless approved by voters of the jurisdiction.
  • Government employers may provide death or disability benefits for new employees, which are not subject to the limitations in this measure.
  • Reciprocity is eliminated.  If a government employee changes employers they are treated as “new employees”.  A teacher changing school districts would lose their pension.  Same with all other employees.
  • By limiting the amount employers pay for a new employee’s retirement benefits, this measure shifts the cost of benefits to employees.  The amount of this shift depends on the retirement plan benefit structure.  The shift for some employees could be a few percent, while the shift for safety employees could be ten, twenty, thirty percent or more.  If retirement benefit plans are not changed for new employees, some new employees will be receiving 10, 20 or 30 percent plus less in their paychecks than employees hired prior to January 1, 2019
10/05/15   Pension Initiative Backers Preparing New Measure
     
    From June until September, the authors of the anti-pension ballot initiative polled the public and tried to gauge the potential success of their work.  Upon realizing that the initial "Title and Summary" was not doing well, they eventually decided to try a new approach.  On October 5th, they introduced two new initiatives with the hope of increasing their odds of success.  Over the next two months, they plan to poll these initiatives and then pick one to finally qualify for the November 2016 ballot.
     
09/15/15   Vested Pension Right Under Attack
08/26/15   (San Jose Mercury News) Initiative Would be a Disaster
08/24/15   Calif Public Safety Labor Blog re: the Initiative
08/18/15   (San Jose Murcury News) Pension Initiative is Misleading
08/15/15   (LA Times) Count the Bad Ideas in Calif Pension Overhaul Proposal
08/12/15   Chuck Reed Wants to Destroy California
08/11/15   Title and Summary of the First Initiatitve (from the Attorney General)
07/29/15   Pension Initiative Would Cause Uncertainties
07/27/15   Legislative Analyst Office Report of the First Initiative 
07/24/15   What Really Happens When Pensions Disappear
07/01/15   Latest Assault on Public Employees
06/04/15   Request for "Title and Summary" of Initiative
06/04/15   Wording of the First Initiative (from Carl Demaio website)
     
    Over the new year, we will continue to post informative about the proposted 2016 Pension initiative.  The initiative would change the California Constitution and essentially destroy defined benefit pensions for all government workers.  The initiative is the idea of former San Jose Mayor Chuck Reed and former San Diego Councilman Carl DeMaio.  It is deceptively titled "The 2016 Voter Empowerment Act" but it completely designed to push public employees out of traditional pensions.