Retirement-Sign.jpgThis blog post was authored by Erin Kunze

Former San Jose Mayor, Chuck Reed, and former San Diego City Councilmember, Carl DeMiao, are spearheading two voter initiatives that would amend the California Constitution as it relates to public employee pension benefits.  The first is the “Voter Empowerment Act of 2016” and the second is the “Government Pension Cap Act of 2016.”  The initiatives have gone through an evolution in form and substance over the last year and a half due in part to disagreements with the Attorney General’s title and description of the initiatives for the ballot.  However, the latest versions appear to be rolling towards the November ballot.

The Voter Empowerment Act would require government employers to obtain voter approval (from the appropriate jurisdiction) to provide a benefit enhancement to new employees, to enroll new employees in a defined benefit pension plan, and/or to pay more than one-half the total cost of retirement benefits for new employees. As with the prior iteration of the initiative, the Act would not “alter any provisions of a labor agreement in effect as of the effective date of [the] Act…”  However, the Act’s requirements would still apply to “any successor labor agreement, renewal or extension” entered into after the effective date of the Act. The Act adds that “[n]othing” in the section regarding successor labor agreements, renewals, or extensions, “shall be interpreted to amend or modify section 9 of Article I [of the State Constitution].”  Section 9, Article I of the State Constitution prohibits laws that impair the obligation of contracts and is the state source of Constitutional protections for public employee pension benefits.

The “Government Pension Cap Act of 2016,” will require voter approval to establish new limits to employer pension plan contributions as a percentage of base employee compensation. However, unlike the Voter Empowerment Act, the Pension Cap Act would not require voter approval to provide a benefit enhancement to any new employee in a defined benefit plan, nor would it require voter approval to enroll new employees in such plan. The Pension Cap Act’s labor agreement language is identical to that of the amended Voter Empowerment Act and similarly includes the proclamation that nothing in the section “shall be interpreted to amend or modify section 9 of Article I [of the State Constitution].”

On December 9, 2015, the Attorney General issued a new title and summary for the amended Voter Empowerment Act describing the initiative as “impos[ing] restrictions on pension and retiree healthcare benefits for new public employees…”  Also on December 9, 2015, the Attorney General issued a title and summary for the Pension Cap Act, describing the Act as “impos[ing] restrictions on employer contributions toward cost of pension and retiree healthcare benefits for new employees…”

The Acts’ proponents are purportedly awaiting title and summary from the Attorney General for both initiatives before which of the two they would circulate for signature.[1] It is now possible that the Acts’ proponents will select one, or both, for circulation, or that they will return to the drawing board to prepare further revisions in the hopes of yet another summary.

Links to current initiatives:

Amended Voter Empowerment Act of 2016 (October 2015): https://www.oag.ca.gov/system/files/initiatives/pdfs/15-0076%20%28Pension%20Reform%20V2%29_0.pdf?

Government Pension Cap Act of 2016: https://www.oag.ca.gov/system/files/initiatives/pdfs/15-0077%20%28Pension%20Reform%20V3%29_0.pdf?
[1]See California Pension Reformers Split Initiative into Two, by Scott Shackford, Oct. 6, 2015, at https://reason.com/blog/2015/10/06/california-pension-reformers-split-initi