SAN JOSE -- San Jose Mayor Chuck Reed and leaders of four other California cities struggling with soaring retirement costs announced Tuesday they will seek to get a pension reform initiative on the November 2014 state ballot.

"This initiative gives government leaders the flexibility to solve their pension problems so they can both provide critical services to the public and make sure that our employees and retirees are paid the benefits that they have earned," Reed said.

San Bernardino Mayor Pat Morris, Santa Ana Mayor Miguel Pulido, Anaheim Mayor Tom Tait and Pacific Grove Mayor Bill Kampe joined Reed in submitting the ballot initiative to the state Attorney General. All but Tait are Democrats.

Representatives of government labor unions blasted the effort, which Reed has been working on for more than a year, as nothing more than an attempt by conservative and corporate interests to punish public employees for financial woes they blame on Wall Street. They argue the public isn't supportive of reducing the retirement security of cops, firefighters, teachers and other government workers.

"It will allow public employers to unilaterally cut the retirement benefits promised to current teachers, firefighters, police officers and school bus drivers," said Dave Low, chairman of Californians for Retirement Security, which represents some 1.6 million current and retired public employees.

But the mayors argued the initiative still would let employees keep the benefits they earned to date while allowing government employers to negotiate changes needed to curb runaway costs and avoid further cuts to programs and services.

The proposed Pension Reform Act of 2014 would amend the California Constitution to give government agencies clear authority to negotiate changes to existing employees' pension or retiree healthcare benefits. The changes would apply "going-forward," allowing employees to keep the benefits they have earned to date but letting employers reduce what they'd earn for the remainder of their careers.

"We need to fix a very broken system," Kampe said. "In Pacific Grove, pension costs have crowded out library hours, overdue street and infrastructure maintenance and other important services."

San Jose's story is similar. The city's annual bill for its retirement plans more than tripled from $73 million to $245 million over a decade thanks to benefit increases, flawed pension fund assumptions and market losses. Career city cops and firefighters can now retire as early as 50 with pensions starting at up to 90 percent of their last salary with automatic 3-percent raises for life.

But to cover the ballooning cost of those benefits, the city has had to leave jobs unfilled and lay off workers, even police officers and firefighters. San Jose has lost about a fourth of its total workforce over a decade, even as its retirement costs continue to climb.

Reed sponsored Measure B on the June 2012 ballot to help San Jose deal with growing costs of retirement plans that remain some $3 billion underfunded. Voters approved it by nearly 70 percent. But city unions have sued to block it, arguing it violates a "vested rights" doctrine established through California court decisions that effectively forbids government employers from ever reducing pension benefits for current and retired workers.

Measure B attempted to work within that constraint by requiring current workers to pay more for their pensions unless they switch to a reduced plan for their remaining years. Measure B also reduced pensions for new hires. A San Diego pension measure that also passed overwhelmingly at the same time as Measure B required 401(k)-type savings plans for all new hires except cops and temporarily froze pay that counts toward pensions.

A Santa Clara County Superior Court judge has yet to rule on Reed's pension measure. San Jose union leaders saw the new initiative as an acknowledgement Measure B is illegal.

"After wasting millions on legal fees, all the while knowing that his Measure B was unlawful, Reed now wants to change the Constitution so that he can break promises made to city workers," said Robert Sapien, president of the San Jose Firefighters union.

Reed and the other mayors argued that if they're forced to make changes only for new hires, they will be driven into insolvency. San Bernardino and Stockton filed for bankruptcy protection this year, due in part to their pension debts.

"If we fail to act," Morris said, "then many other cities and counties will soon follow my city into bankruptcy."

The measure will still face a tough road toward qualifying for the ballot and passing amid what is expected to be heavy union opposition. Pension reformers pulled out of a statewide ballot measure last year after complaining that Attorney General Kamala Harris' ballot summary of their proposal was unfair.

Unions are gearing up for a fight over the latest effort.

Stanford University political science professor Bruce Cain said given that most privately employed taxpayers don't have the generous pensions of government workers, "if it were to get to the voters, you've got to believe that it would have a shot."

But he also noted that unions will put their most sympathetic faces into the fight, police and firefighters, making it a tough battle.

"You start picking on police and fire, they can sway public opinion," Cain said. "People are grateful to have others willing to put their lives on the line to protect them."

Pension Reform
San Jose Mayor Chuck Reed and four other California city leaders announced a statewide ballot initiative effort Tuesday to make it easier for governments to reduce employee pensions for the remainder of their careers.
  • The proposed Pension Reform Act of 2014 would amend the California Constitution to give government agencies clear authority to negotiate changes to existing employees' pension or retiree healthcare benefits. The changes would apply "going-forward," allowing employees to keep the benefits they earned to date but letting employers reduce what they'd earn for the remainder of their careers.
  • The proposal is submitted to the Attorney General, who will prepare a ballot summary and title to be circulated for signatures to qualify the initiative.
  • Once the title and summary are prepared, backers have 150 days to circulate petitions and collect signatures.
  • Backers need to get at least 807,615 valid voter signatures, representing 8 percent of the votes cast in last election for governor.