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One Victory; On to Another Challenge

January 1, 2012
John Tennant SFPOA Counsel

The timing was nothing if not ironic:  a broad coalition championed by labor achieves victory in lowering pension costs with the voters’ overwhelming passage of Proposition C and summary defeat of Public Defender Jeff Adachi’s draconian countermeasure, Proposition D, only to witness Governor Jerry Brown’s announcement that same week to advance his own, statewide pension reform measure which appears to work as much harm to current employees’ salaries as Adachi’s failed attempt would have done.  Savoring the moment of the San Francisco public’s trouncing of Adachi proved to be an elusive pleasure.  We once again have work on our hands.

Many have expressed disbelief that the Governor’s measure could actually be intended to affect a charter city like San Francisco, with its own, independent retirement system.  Unfortunately, any hope that Brown’s statewide measure excludes charter cities would be misplaced, at least when viewed against the actual language of the Governor’s press release on the subject:  “The pension plan I am proposing will apply to all California state, local, school and other public employers, new public employees, and current public employees as legally permissible.”  It’s that telltale “all” which signals the alarm.

And what, one asks, is the upshot for active employees of the Governor’s proposal?  Of the twelve points that comprise Brown’s plan, the first is by far and away the worst in terms of its impact on current workers.  And here again, I’ll let the Governor speak for himself:

“My plan will require that all new and current employees transition to a contribution level of at least 50 percent of the annual cost of their pension benefits. Given the different levels of employee contributions, the move to a contribution level of at least 50 percent will be phased in at a pace that takes into account current contribution levels, current contracts and the collective bargaining process.”

(Governor’s Twelve Point Pension Reform Plan, October 27, 2011)

To put this in perspective, some of the more dire predictions place San Francisco’s future contribution rate to its retirement system at 30%.  Under Brown’s proposal, that would mean that active employees would have to begin contributing 15% toward the cost of their pensions -- a figure equivalent to what Adachi had wanted and certainly in excess of what the labor coalition-sponsored Proposition C requires.

And so the question put to lawyers like yours truly is, “Will the Governor’s proposal pass legal muster?”  The answer – unfortunately, like so many answers to questions which intrude into unsettled areas of the law – is “Maybe.” 

First off, note the caveat in the Governor’s press release with respect to any change that affects “current” – as opposed to “new” – public employees: “as legally permissible.”  This qualifier seems to be a bow to the legal theory known as the “vested rights doctrine” – a judicially-created doctrine which originates in the Contracts Clause of the California Constitution and essentially provides that certain retirement benefits cannot be reduced unless comparable new advantages accompany such reduction. 

The query necessarily then becomes whether the Governor intends to enact his twelve-point, pension reform plan via the Legislature’s passing a statute or via a public vote changing the state constitution.  If it’s the former, then the Governor’s plan would arguably violate the doctrine of vested rights.  A statute enacted by the Legislature contrary to the Contracts Clause would conceivably be struck down in short order by the courts as unconstitutional. 

But if Jerry Brown opts to push forward a statewide constitutional amendment, voted on by California’s citizens and seeking to amend the Contracts Clause as it pertains to retirement benefits, all bets are off.  Change the document in which the vested rights doctrine originates in the first place, and you arguably change that doctrine itself.  (I have written about this in a prior article, published twice in these pages:  “Constitutional Law’s Paradox: What the Proposition 8 Controversy Reveals About Tensions in American Law and the Development of Labor Law” SFPOA Journal, April ’09 and May ’11.)  Our saving grace here may well be the fact that a constitutional amendment rolling back vested rights seems a bit heavy-handed an approach for a Democratic governor, particularly one elected with a wide array of labor support.  If the Governor elects instead to proceed by statutory change, the Contracts Clause-based vested rights arguments remain intact. 

The other argument that can be mounted against a statute-based change lies in what is known as the “home rule” provisions of the California Constitution.  For our purposes, “home rule” means essentially that the City of San Francisco, not the State Legislature, has the sole authority to provide for the compensation of its employees.  For the Legislature to pass a statute setting retirement contribution levels would be to deprive San Francisco of its constitutionally-guaranteed home rule.

But here, a note of caution should enter our analysis.  Legislation that involves matters of “statewide concern” will survive any home rule challenge.  And one law critical to police officers statewide was initially challenged as violating home rule: the Public Safety Officers’ Procedural Bill of Rights Act (POBRA).  In the landmark case of Baggett v. Gates (32 Cal. 3d 128 (1982)), the California Supreme Court rejected, fortunately, former Police Chief Daryl Gates and the City of Los Angeles’s contention that POBRA did not apply to L.A., a charter city and county.   Gates and the City had argued that POBRA amounted to “an attempt by the Legislature to impose rigid rule regarding the internal affairs of city police departments . . . [,] a province the Legislature cannot invade” without violating home rule. (Id. at 137).  The State High Court, with Chief Justice Rose Bird writing for the majority, rejected such an argument, holding that POBRA addressed a matter of statewide concern and, thus, did not contravene home rule: “the total effect of [POBRA] is not to deprive local governments of the right to manage and control their police departments but to secure basic rights and protections to [public safety officers.]”  (Id. at 140).

 My point here, of course is that we are apt to think of anything the Legislature does in our favor vis-à-vis the City of San Francisco – e.g., POBRA, statutory privacy protections for police officer personnel records, etc. – as matters of statewide concern, while conversely thinking that actions undertaken by the Legislature counter to our interest – e.g., pension reform – as a violation of home rule.  Ralph Waldo Emerson may have been correct in his famous observation that a “foolish consistency is the hobgoblin of little minds,” but consistency becomes awfully important in ensuring continued judicial support of many of the legal protections we enjoy.  Undermining legal doctrine in one area because it is in your interest regarding one particular issue only to have that same doctrine’s erosion potentially hobble other rights you possess, may not be the wisest course of action.

Still, the good news is that should the Governor’s proposed pension reform measure become such a reality that it actually affects current police officers, we have a number of arrows in our legal quiver.  Time will tell whether it will be necessary to let them fly. 

“Roll the Union On . . .”