(UPDATE: Measure Q was rejected by a final vote of 55 percent “no” and 45 percent “yes.”)
The city charter has forced San Bernardino to give police two pay raises since declaring bankruptcy, one costing $1 million and the other $1.3 million. On Tuesday, voters were asked Tuesday to change the charter and prevent a third automatic pay raise.
Under a charter provision adopted in the 1950s, San Bernardino has a unique twist on a common practice: Using the pay and benefits offered by similar employers as a benchmark during labor contract bargaining.
In San Bernardino, pay for police and firefighters is not bargained. It’s set at the average of pay in 10 cities of population between 100,000 to 250,000, selected by management and labor taking turns crossing one city from the list until only 10 remain.
Measure Q was placed on the ballot by a 4-3 vote of the city council. The ballot argument for the measure said the charter provision contributed to the city’s budget problems.
“Every other city has a unique economic situation, and every other city negotiates salaries within collective bargaining,” said the argument. “San Bernardino is locked out of this option.”
The ballot argument does not mention that San Bernardino is the “poorest city of its size in the state,” as a George Mason University study said last year. The 10 pay-link cities this year include Irvine, Santa Rosa, Daly City and Santa Clarita.
The San Bernardino per capita income was $15,672, compared to the state average of $29,634, according to the 2010 census. And the income of 29 percent of San Bernardino residents was below the poverty line, compared to 14 percent statewide.
“As an unfortunate consequence of politics and historical trends, the city found itself committed to salaries and pensions that were neither proportionate nor sustainable,” said the George Mason study by Frank Shafroth and Mike Lawson.
After an emergency bankruptcy filing on Aug. 1, 2012, which was said to be needed to continue making payroll, San Bernardino stopped general-fund employer payments to CalPERS during that fiscal year, saving $13.5 million before resuming.
The skipped payments gave the California Public Employees Retirement System grounds to terminate its contract with the city. But CalPERS only responded with a lengthy legal battle, becoming the lone opponent of the city’s eligibility for bankruptcy.
Last June San Bernardino said in a court filing an “interim agreement” had been reached with CalPERS that would help form the basis for a debt-cutting “plan of adjustment” to exit bankruptcy.
No details of the closed-door mediation were revealed. But CalPERS slowed an appeal of a ruling that San Bernardino is eligible for bankruptcy. A $10 million city budget item this year appears to be a payment on the skipped CalPERS contribution.
As in the recent Vallejo and Stockton bankruptcies, San Bernardino has not publicly proposed cutting pensions. A plan for operating in bankruptcy called for a “fresh start” that would “reamortize CalPERS liability,” saving $1.3 million in the first year.
A San Bernardino attorney, Paul Glassman, was quoted by the San Bernardino Sun as telling the court in June: “The city believes based on discussions with unions and retirees that sustaining their relation with CalPERS is very important.”
At a public bankruptcy update last month, San Bernardino officials said city retirement costs are expected to double during the next 10 years. And during the next eight years, general fund expenses are projected to grow faster than revenue.
This year, the police pay raises required by the charter provision ranged from 3.52 percent to 4.92 percent for union members and from 2.52 percent to 5.29 percent for police managers.
“The total costs to the city represent over $1.3 million annually in additional base salaries, benefit and estimated overtime costs,” Allen Parker, the San Bernardino city manager, said in a news release last month.
A tentative agreement between the city and police union fell apart last month. The Measure Q ballot argument, printed earlier, said the agreement was ratified and the union and the city are “working together to keep San Bernardino safe and moving forward.”
The city’s main labor battle has been with the firefighters union. The ballot argument said firefighters filed a lawsuit that forced the city to comply with the charter provision, giving police and firefighters raises while laying off other employees.
Firefighters broke off talks with the city and did not help choose 10 comparable cities this year, so they received no raise. In September U.S. Bankruptcy Judge Meredith Jury allowed the city to overturn the firefighter contract.
Last month the city council on a 4-3 vote imposed a new firefighter contract, closing a fire station and making a staffing change. A shift-hours requirement in the charter, along with the old contract, is said to force $7 million in overtime this year.
The city contends the cost of the average firefighter, $167,500, is well above the state average and mainly due to forced overtime. The union contends that even without the charter provision, federal labor law would require the overtime.
The firefighters and police unions are urging the court to set a deadline for the city to issue a plan of adjustment to cut debt and exit bankruptcy. The city, still trying to negotiate agreements, has said it may not issue a plan until early next year or later.
Opponents of Measure Q echo arguments in the Stockton bankruptcy and the San Jose mayoral election this week that cutting pensions would result in a “mass exodus” of employees, particularly police.
“By politicizing the salary process, Measure Q will cause our best qualified firefighters and police officers to leave — making San Bernardino even less safe for residents,” said the ballot argument against Measure Q.
A CalPERS-sponsored bill, SB 400 in 1999, that gave the Highway Patrol a big retroactive pension boost, the “3 at 50” formula, quickly spread to cities through bargaining based on benefits offered by similar employers.
“Indeed, the entire ‘salary comparison’ process for setting wages and benefits has been used by labor unions in California to ‘ratchet up’ wage and benefit levels throughout the state for the past two decades,” Robert Bobb, a former Oakland and Santa Ana city manager, testified during the Stockton bankruptcy.
One of the questions raised by Gov. Brown’s pension reform (AB 340 in 2012) is whether the salary comparison process will work in reverse. New police and firefighters in CalPERS and 20 county systems get lower pension reforms under the reform.
But the big coastal cities where well-publicized rising pension costs are squeezing budgets (Los Angeles, San Francisco, San Diego and San Jose) have independent retirement systems not covered by the new reform.
During labor bargaining, how likely are the pensions of new hires in the big cities to “ratchet down” as a result of comparisons with the counties and smaller cities covered by the pension reform?
Ed’s Note: Reporter Ed Mendel covered the Capitol in Sacramento for nearly three decades, most recently for the San Diego Union-Tribune. More stories are at Calpensions.com.