San Diego's pension reform efforts are now saddled with Social Security issues that could wind up in court along with other legal disputes.
Those issues are posed by a new state law that’s getting an unwelcome reception from officials at City Hall.
The city and its labor groups have just agreed on an interim 401(k) retirement plan for new, non-police workers pending rulings in legal cases against Proposition B, the pension reform measure that San Diego voters approved by a landslide in June.
The interim plan will end a city hiring freeze that’s been in effect since mid-summer, as a result of earlier challenges to Prop. B.
Meantime, Gov. Brown has just signed legislation requiring the city to put the new hires into Social Security.
"I think it was entirely misguided,” Mayor Jerry Sanders told reporters at a Tuesday news conference. "We'll have our city attorney take a look at that legislation to see if it's even legal.”
The new law mandates enrolling San Diego's future workers, except police hires, in Social Security because Prop. B does away with the city’s defined-benefit pensions going forward.
The city and its employees opted to withdraw from Social Security in 1981, on grounds that the municipal retirement benefits were better.
City officials say the law would bar employee groups from choosing 401(k) investments over Social Security at a time when Social Security has funding issues.
Labor leaders defend Social Security as an essential safety net for union and non-union workers alike.
“The fact that the state would even have to come in and require the city to do what every other employer does in America is amazing to me," says Lorena Gonzalez, CEO of the San Diego-Imperial Counties Labor Council. “This was a bill that was supported by Republicans and Democrats in the State Assembly; this was not a partisan bill. And it's time the city stand up and do what every other private-sector employer does."
City officials plan to consult with employee groups as well as the city attorney before decisions regarding the state law are made.
Either way, taxpayer costs are capped under both the 401(k) and Social Security plans.
Meantime, rulings on state labor law violations alleged against the city by its largest municipal bargaining group are pending from an administrative law judge.
Whatever the outcome, they’re expected to be appealed to the court system.