San Jose city manager, police chief highest paid in salary survey of 200 cities

As reported by the San Jose Mercury News:

San Jose’s police chief and city manager each raked in nearly a half million dollars in salary and benefits in 2016, topping their counterparts at more than 200 other California cities, new compensation data released Monday show.

Police Chief Eddie Garcia cost taxpayers $497,000 in pay and benefits, according to records released Monday by a Las Vegas nonprofit, Transparent California. City Manager Norberto Duenas was right behind Garcia at $492,000 in pay and benefits.

The distinction for San Jose was notable, especially after battles over paychecks and pensions led to an exodus of rank-and-file officers in recent years in America’s 10th-largest city.

Garcia said he was “somewhat surprised” that his compensation was tops among California’s police chiefs for whom complete pay and benefit information is available. …

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Suffocating Regulations Driving California’s Housing Crisis to the Brink

urban-housing-sprawl-366c0Stories about the desperate living arrangements of highly compensated California tech workers sound like tales of Third World misery. One newspaper reports that a Silicon Valley engineer pays $1,400 a month just to live in a closet. He’s squeezing his wallet for the privilege of having a “private room” in a house where five adults live in bunk beds in a single bedroom. Another media outlet reported that a Google engineer moved into a “128-square-foot truck — in the company’s parking lot” because the cost of living in a real house was just too much.

Housing is so expensive across California that Joel Singer, CEO of the California Association of Realtors, said last fall that “only about one-third of our fellow citizens can afford to buy a median-priced home in the Golden State, down from a peak of 56 percent just four years ago.” Californians who own their homes spend more than a quarter of their total income on housing, the highest ratio in the nation. In 2014, Golden State renters paid 33.6 percent of their income on housing — third-highest in the nation. Despite rent-control laws — actually, in part due to those laws — San Francisco has the most unaffordable rental costs in the world, according to Nested, an international real estate service. Los Angeles is tenth on the list. Three of the five costliest housing markets in North America are found in California: San Francisco, San Jose and Los Angeles.

The housing crisis isn’t confined to the state’s elite coastal enclaves. In Riverside County, part of a region east of Los Angeles known as the Inland Empire, only 39 percent of households “are able to purchase a median-priced home, which in February was $334,440 for a single-family home,” the Desert Sun reported last March. The national average is 58 percent.

The California housing crunch is the product of a dire shortage of homes. Over the last decade, developers have built an average of 80,000 homes each year. But that number is about 100,000 units short of what’s needed to keep up with demand. According to the California Department of Housing and Community Development, the state will need to build roughly 1.8 million units between 2015 and 2025 “to meet projected population and household growth.” That would be like building more than 10 new Oaklands or nearly six new San Joses over that time.

Developers aren’t fools. They know that there is a great demand for housing in California. The profit motive would make them happy to build all those additional Oaklands. But California’s regulatory climate and development policies have eaten away at that incentive. The hurdles to building homes are high and solidly rooted: the most imposing is the California Environmental Quality Act (CEQA), which allows opponents of development to shut down projects in the courts, often with no environmental basis. But because the lawsuits can disrupt and suppress projects, the law has become, as the Hoover Institution’s Loren Kaye says, a “tool for abuse.”

Other barriers include the steepest impact fees in the nation, in some cases nearly $25,000 per unit; affordable-housing mandates in more than 170 jurisdictions that require developers either to choose between building units at below-market value or face government fines; local anti-growth policies; and rent control.

The regulatory regime even includes parking mandates that require, for example, a development to have at least one parking space for every bedroom in the project — a formula that absurdly still applies when only one driver lives in a three-bedroom apartment housing five people. A Southern California Association of Governments report says that sometimes housing units are removed from a project just to accommodate these local minimum-parking mandates.

Californians have raised NIMBYism virtually to a level of first principles. Golden Staters don’t mind housing development, as long as it’s “not in my backyard.” The state has an ugly history of established residents pressuring local officials to build policy walls that make development too costly to pursue. The result of all this government is a shortage that has produced the most distorted housing market in the country. It’s so warped and battered that it can hardly be called a market.

Layers of government housing policy have been settling on top of one another for decades, creating a deep regulatory bog that is exceedingly difficult to dredge. So it’s reasonable to ask if California will ever become livable again. And with state and local policymakers seemingly less attached to reality every year, it’s reasonable to give up and move, as many have already done.

California Lawmakers to Scrutinize New Bullet-Train Plans

As reported by ABC News:

State lawmakers will have their first opportunity to quiz the officials responsible for California’s $64 billion high-speed rail plans at a committee hearing Monday to review a new business plan that calls for overhauling its proposed route and postponing the first service by three years.

Those overseeing the project are expected to face tough questions about the plan to shift construction to the San Francisco Bay Area rather than head first to Southern California, an acknowledgement of the financial and political challenges that have plagued the project.

The new plan calls for building the first 250-mile segment from the rural town of Shafter to San Jose at a cost of nearly $21 billion. The first leg would begin operating in 2025 — three years later and 50 miles shorter than the original planned route that would have sent trains to the San Fernando Valley.

Project backers are touting it as the first plan to build a …

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Electric Cars – The Promise and the Reality    


By Abe Ostrovsky with contribution from Peter Whealton

I leased an electric car nine months ago. A 2014 BMW I3 rex. The BMW advertising was clear. Eighty-seven miles per full charge plus 48 miles of additional range from the range extender, a built-in gas driven generator that recharges the battery while driving. The gas tank serving the generator is 1.5 gallons. The extender is meant for the occasional short additional miles to reach a charging station when a destination turns out to be just beyond the electric range or mishaps on the road mandate a detour.

My discussions with the sales person reinforced the claimed range and I was further reassured as I read that since BMW did not expect the range extender to be used regularly, it would automatically come on and cycle for 5 or 6 minutes every 2 months to keep it lubricated and ready.

The battery charger that is included with the car is classified as a level 1 and takes 20 hours for a full charge. BMW sells a level 2 charger (an extra $980 accessory which requires wall mounting to a 220 Volt, 30 Amp source – it cost me $250 to provide this power in my garage). This charger will charge a depleted battery in 3+ hours. The logical operating radius for the car is therefore 43.5 miles one way assuming there is no time to recharge the battery at the destination.

In my case, 43 miles was sufficient to reach most addresses in Los Altos Hills and San Jose was reachable depleting the battery one way. This covered most of my needs so I leased the car, bought a level 2 charger and had an electrician install it in my garage.

Soon I learned that the car was capable of delivering the 87 mile range only when driven carefully (no quick acceleration and no extensive brake usage) on flat streets (no San Francisco hills) in a mode that deactivated many features (no AC or heat or seat heaters) at a maximum speed of 56 miles per hour (no expressway driving). The actual range being driven normally (I am told I am an aggressive driver) on San Francisco hills and Bay Area expressways is around 50 miles, just a few miles more than half  the advertised range.

Just so there is no misunderstanding, I think the I3 is a great city car. It is well featured, easy to drive, has nice pep, handles well, parks easily and transports 4 comfortably. As a city car in San Francisco, a city that is approximately 7 miles by 7 miles, it is terrific. But if normal usage requires more than 25 miles one way, the battery system is inadequate.

My investigations into battery technology indicate that advances in battery density (the amount of stored electricity available per pound of battery) is rapidly increasing. Chevrolet has recently announced the Chevy Bolt, a compact expected to deliver 200 miles of range on a fully charged battery which should be available by end of 2016. I expect that battery technology advances will allow a doubling of range for same size and weight batteries by 2017. At that point the lower price electrics will have sufficient battery power to compete with gasoline powered cars at competitive pricing.

Until then, I will continue to rent Zip cars when going further than the short rides to San Carlos airport, Walnut Creek or Lucas Valley.

San Jose joins forces with seven other cities to raise minimum wage

As reported by the San Jose Mercury News:

SAN JOSE — Top officials from seven Bay Area cities will join Mayor Sam Liccardo on Thursday to announce an unprecedented joint venture to raise the minimum wage across the valley in a regional effort to close the growing gap between the rich and the poor in Silicon Valley.

The official announcement is expected in a news conference Thursday. The mayors of Campbell, Palo Alto, Cupertino, Milpitas, Morgan Hill, Monte Sereno and a representative from the city of Santa Clara are expected to announce their support for the initiative.

It’s the first time the region has seen such a large collective effort by multiple cities to raise wages. …

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San Jose City Council Capitulates to Police Union Power

“He told the class to take advantage of the academy, and then find jobs elsewhere. The police union tries to get us to leave the department.”

–  Anonymous source to NBC Bay Area, television report “Another San Jose Police Recruit Says Union Tried to Get Cadets to ‘Find Jobs Elsewhere’,” Oct. 28, 2014 (excerpt begins at 1:38 in report).

San Jose Police DepartmentA precedent setting new development in San Jose last week provides abundant evidence of just how powerful local government unions really are in California. As reported Monday in San Jose Inside and elsewhere, an embattled City Council has tentatively approved a new contract with San Jose’s police union that awards them “a 5 percent ‘retention’ bonus and an 8 percent raise over the next 16 months. In addition, former officers who return to the force in the next year can claim a 5 percent signing bonus.”

More significantly, at the same time, the San Jose City Council has tentatively agreed to drop their appeal of a court ruling that overturned a key part of a San Jose pension reform, a re-examination of the so-called “California Rule.” As pension expert Ed Mendel reported in PublicCEO, “The ‘California rule’ is a series of state court decisions widely believed to mean that the pension offered on the date of hire becomes a vested right, protected by contract law, that can only be cut if offset by a new benefit of comparable value.”

In practical terms, this means that pension benefit formulas, according to the California Rule, cannot even be trimmed for future work performed by existing employees. San Jose’s pension reform Measure B, passed by 70 percent of voters in 2012, presented city employees with a choice – they could either contribute an additional 16 percent towards their pension benefits via payroll withholding, or they could accept lower pension benefit accruals from then on. Nothing they had earned to-date would have been taken away from them.

Despite legal opinions that claim the California Rule is not well established law, and despite that the California Rule is contrary to the law governing public sector pensions in most states, and contrary to all law governing private sector pensions everywhere, San Jose’s local elected officials have capitulated.


It is difficult to overstate just how hypocritical the union’s position is on the issue of modifying pension benefit formulas. Because the problems with pensions began back in 1999, when Senate Bill 400 raised pension benefit accruals per year for the California Highway Patrol. Within a few years, most every agency in California followed suit. And these pension benefit enhancements were applied retroactively to the date of the employees’ hire.

That is, starting in 1999, agencies changed the pension benefit formula so that, for example, police and fire pension accruals were not just increasing from 2 percent to 3 percent per year from then on, but retroactively to the day each employee was hired. So someone who would have earned a pension equivalent to 2 percent of their final salary times the years they worked would now earn a pension equivalent to 3 percent of their salary times the years they worked, even if they were going to retire within the next year or two.

What San Jose Measure B tried to do was not roll back pension benefits from 3 percent per year to 2 percent per year for years already worked. It only tried to reduce the benefit accrual, prospectively, for years still to be worked. And even that was too much for these unions.


If taxpayers could afford to pay these pension benefits, there might be a stronger argument to preserve them. But San Jose’s independent Police and Fire Department Retirement Plan, according to their most recent financial report, is not in great shape financially. Keeping it afloat requires staggering sums of money from taxpayers that are only going to increase each year. Here are highlights:

(1) The plan as of June 30, 2014 (most recent data available) was 77.5 percent funded (page 114). This means that instead of earning their officially projected annual return on investment of 7.125 percent per year, just to avoid becoming more underfunded, they will have to earn 9.2 percent per year. Just to stay even. That is their so-called “risk free” rate of return.

(2) The fund truly is “risk free” to participants, because the taxpayers pay most of the expense and cover the losses when the market fails. In FYE 6-30-2014, police and fire employees contributed $21.1 million into their retirement fund, and taxpayers (the city of San Jose) contributed $123.6 million (page 69), nearly six times as much. How many “six to one” matching contributions are out there for corporate 401(k) plans?

(3) The unfunded liability for the San Jose Police and Fire Retirement Plan was $806 million (page 114) as of June 30, 2013 (most recent actuarial data), equal to 436 percent of payroll. Or looking at this another way, the city’s pension contribution was $123.6 million, whereas their “covered payroll” was $184.6 million. That is, for every dollar San Jose pays to put police and firefighters on the street, they have to pay 67 cents to the pension fund.

(4) It’s not just pensions. The San Jose Police and Fire Retirement Plan includes city funded retirement health insurance benefits. How’s that fund doing? As of June 30, 2013 (most recent data), that plan was 11 percent funded, with an unfunded liability of $625.5 million (page 65).

(5) If you consolidate the financial data for San Jose’s Police and Fire Retirement Plan’s pension and healthcare (OPEB) plans, the most recent statements indicate they are 67 percent funded, with a total unfunded liability of $1.4 billion. If San Jose were to responsibly reduce their total unfunded liability for public safety retirement benefits, they would be paying far more than 67 cents for every dollar of payroll.


Throughout this battle between fiscal realists and the police union in San Jose, the police have maintained that officers were leaving the city to work elsewhere or to retire. There’s no question that their ranks have thinned, perhaps alarmingly. According to SJ Inside, “the agency [currently has] 943 sworn officers out of a budgeted 1,109 positions.” And historically San Jose’s police department has had as many as 1,400 officers. But is the union thwarting efforts to fill the ranks?

Several news reports suggest that could be the case – starting with the local NBC television affiliate’s report quoted earlier. That anonymous source corroborated what another person stated publicly. According to the San Jose Mercury guest column entitled “San Jose police recruit: Union told class to quit right away for good of the department,” former police academy cadet Elyse Rivas writes:

“On the first day of the academy, our orientation included the opportunity to meet Jim Unland, the Police Officers Association’s president. In no uncertain terms, he blamed Measure B for the departure of hundreds of officers — and he told us that it would be better for the department and for us if we would just quit, right then and there. He said that our employment with the department did not help the POA’s cause in proving Measure B was killing the department’s recruitment capabilities. He urged us to find jobs elsewhere.”

Reached for comment earlier today regarding developments in San Jose, former Mayor Chuck Reed agreed with the substance of these allegations. Not only did he confirm reports of union representatives discouraging academy recruits from taking jobs with the department, but he also described other ways they thwarted recruitment:

“There were reports of recruiting events held in the San Jose police union offices where they invited police recruiters in from other cities to encourage active San Jose police officers to take these jobs in other cities.”

Reed also said, “When we were trying to hire officers, we wanted to bring in retired police officers in to do the background checks so we could keep our active officers on the beat – but the union urged retirees to refuse to accept the work.”

In any case, Reed pointed out that the city had determined to reduce the size of the police force back in 2010, well before voters approved Measure B, saying “the police department headcount went down from 1,400 to 1,100 before there was any pension reform.” Reed believes that an ideal headcount for the San Jose police department would not require returning to 1,400, and that getting to the budgeted 1,109 positions would be a good first step.


Getting timely and accurate information on public pay is difficult because financial reports from public entities take a long time to produce and often omit important data. The most recent payroll records publicly available for the city of San Jose are for 2013. According to a search on Transparent California of San Jose city employees with “Police” in their job title, in 2013 there were 260 of them who made over $250,000 in pay and benefits, and an astonishing 806 who made over $200,000 in pay and benefits. Here’s the link:  San Jose city employees, 2013, with “Police” in their job title.

Pension information for San Jose’s retired police officers is complicated by the fact that the data includes firefighters along with police officers. Moreover, the average full-career pension estimates are understated because a significant percentage of the current participants retired before pension benefits were enhanced in San Jose – a process of “continual enhancement” that continued up until 2008. Using 2014 data acquired by Transparent California, the estimated average full career pension for a San Jose police/fire retiree is $99,116 – with guaranteed 3 percent per year cost-of-living increases. The number for recent, post-2008, full-career retirees is undoubtedly much higher. Here is a 2014 roster of all of San Jose’s police/fire retirees – note that individual retirement health benefits (unfunded liability of $625 million) were not provided – certainly adding a value of at least another $10,000 per year.

Are San Jose’s police officers underpaid? The average veteran officer makes pay and benefits worth well over $200,000 per year. Add to that the likely 5 percent “retention bonus, and the 8 percent raise over the next 16 months per the tentative new agreement. You decide.

The personal attacks and confrontational tactics employed by the San Jose police officers union against their political opponents do not reflect well on the fine men and women who staff that department, who perform work of vital importance to society. Whether or not they intentionally urged officers to quit (or never join) the San Jose police force is almost irrelevant, despite abundant evidence that suggests they did. Because their real transgression against the people of San Jose, the taxpayers, the elected officials, and public safety itself, is to insist on levels of pay and benefits for their officers that are far more than the city can afford.

*   *   *

Ed Ring is the executive director of the California Policy Center.

CA Supreme Court Forces Affordable Housing on Developers

affordable housingMany Golden State developers must now include so-called affordable housing units in their sales plans. The California Supreme Court sided against the builders, who brought a contentious, high-profile suit against municipal policymakers.

“At issue was a 2010 San Jose law that requires some new residential developments to set aside 15 percent of their units for sale at below-market rates,” noted the San Jose Mercury News. “The California Building Industry Association said the city failed to justify the 15 percent requirement and should base any such quota on an assessment of possible negative effects of the market-rate housing.”

But the impact of the ruling went far beyond San Jose city limits. “The League of California Cities and California State Association of Counties estimate more than 170 municipalities have some kind of ordinance on the books,” according to KQED. Officials in Sacramento have also brought attention to the diminishing quantity of less costly urban housing. As the Los Angeles Times observed, the state’s Legislative Analyst reported months ago that California’s housing is among the nation’s most expensive.

Given the court’s protection of the laws, their continued expansion became all but certain in liberal-leaning urban areas. “The decision clears the way for Los Angeles and other cities to require developers to sell a percentage of the units they build at below-market rates as a condition of a building permit. Developers also could be given the option of paying into a fund for low-cost housing,” the Times reported.

In a statement, the Times added, L.A. mayor Eric Garcetti applauded the ruling. “This gives Los Angeles and other local governments another possible tool to use as we tackle our affordable housing crisis,” he said.

A hands-off approach

Describing California’s paucity of cheap housing as a crisis of “epic proportions,” Chief Justice Tani Cantil-Sakauye went well beyond the bounds of San Jose’s set-asides to endorse broad municipal regulatory powers. Cities, she wrote, should “regulate the use of real property to serve the legitimate interests of the general public and the community at large.”

Rather than seeing itself as indulging in judicial activism, however, the court embraced city attorneys’ contentions that its powers simply didn’t extend to pricing rules. “There is no basis for the courts to second-guess the City Council’s considered judgment in adopting an inclusionary housing ordinance as a means to comply with its affordable housing aims,” they argued, according to the Associated Press.

Judicial gymnastics

Behind the hands-off approach, however, the court followed a complex line of legal interpretation. Plaintiffs claimed that San Jose’s “inclusive housing ordinance,” or IHO, amounted to an unconstitutional “taking” of property. Previously, the U.S. Supreme Court had ruled that the possibility of such a taking triggered heightened judicial scrutiny, a stricter standard of interpretation than the city’s attorneys wanted the California Supreme Court to use.

Under heightened scrutiny, a so-called “exaction” imposed by an IHO can only pass constitutional muster if regulators “can establish a reasonable relationship between the amount of a city’s need for affordable housing and the portion of that need attributable to a particular development project,” as the National Law Review noted.

The city admitted that it broke new ground in the aggressiveness of its housing regulations. As KQED noted, “the city side-stepped the usual study showing a relationship between the development of for-sale housing and the city’s need for affordable housing.”

But the court, the Review continued, ruled the set-aside in San Jose’s IHO was not an exaction at all, “because it did not constitute the payment of a monetary fee but rather simply placed a limit on the way a developer may use its property.” Rather than requiring developers to pay money or turn over its property to the public, the IHO placed “a restriction on the property by limiting the price for which the developer may offer certain units for sale.”

Originally published on

More Pain at the Pump

Gas-Pump-blue-generic+flippedSacramento is about to launch a new attack in its ongoing war on drivers.

California’s 48.6 cent gas tax already ranks second out of 50 states –- the feds take another 18.4 cents — and when the hidden carbon tax, part of the cap-and-trade program, is factored in, our state leads the pack by a wide margin. But this is not nearly enough, according to the political class.

Sen. Jim Beall is building a coalition of both Democrats and Republicans in the Legislature to hike gas taxes along with vehicle license fees and registration.

The San Jose lawmaker’s Senate Bill 16 slams taxpayers in three ways. First, it would raise at least $3 billion annually by increasing the gas tax by another 10 cents a gallon.  Second, it would hike the vehicle license fee, which is based on value, by more than 50 percent over 5 years. Third, it would increase the cost to register a vehicle by over 80 percent.

Although the backers of the SB16 tax increase say it is vital to make up the claimed $59 billion backlog in roadway maintenance, some of the funds are slated to go to repaying transportation bonds that, when passed, were to be paid from the general fund. This means that not all of the new revenue will go to the stated intent of fixing roads and highways.

Whatever the actual dollar amount of the backlog in roadway maintenance, this shortfall is the result of previous diversions of gas tax and truck weight revenue to budget items that have no direct impact on road improvement, and Beall’s bill would allow this practice to continue.

It should not go unnoticed that the $59 billion estimated backlog approaches the $68 billion that the governor and Legislature want to spend on the bullet train. Quentin Kopp, former chairman of the California High-Speed Rail Authority, has become a strong critic, characterizing it as “low-speed rail” due to the changes that have been made to the original plan that voters were promised to convince them to provide seed money for the project in 2008. He adds that to be financially viable, high-speed trains need to run from 10 to 20 trains per hour, but due to the current plan, called a “blended system,” slower trains and bullet trains must share the same track, reducing the number of fast trains to about four per hour. And even supporters of the project as currently envisioned concede that the Los Angeles to San Francisco trip that voters were told would take about two-hours and forty minutes for a $50 fare, will likely take closer to 5 hours at nearly double the cost to the rider.

So, while Sacramento politicians and special interest insiders, including unions and construction companies, continue to push for billions of dollars of new spending on a high-speed rail system that is not expected to be completed before 2029, they expect drivers, fed up with bumping along on crumbling roads and highways, to pay more.

Gas prices in California are already tops in the nation. If taxes are increased again, every motorist should be given a railroad engineer’s cap compliments of Sacramento lawmakers and the governor because the extra they pay will free up money, which could have been used for roads, to be spent on their pet train.

Jon Coupal is president of the Howard Jarvis Taxpayers Association — California’s largest grass-roots taxpayer organization dedicated to the protection of Proposition 13 and the advancement of taxpayers’ rights.

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Water-wasting fines of $10,000 proposed by Gov. Jerry Brown

As reported by the San Jose Mercury News:

Waste California’s water, risk a $10,000 fine.

Residents and businesses could soon face that threat after Gov. Jerry Brown on Tuesday unveiled legislation that would increase potential penalties on the most flagrant water scofflaws and allow cities, counties and water districts to issue fines without having to go to court.

“As this drought stretches on, we’ll continue to do whatever is necessary to help communities save more water,” Brown said after meeting with California mayors, including San Jose’s Sam Liccardo and Oakland’s Libby Schaaf.

But whether the proposal — which would boost maximum fines 20-fold from the current $500 — will ever take effect was unclear Tuesday.

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Pension initiative may empower local reforms

The leaders of two local pension reforms, former San Jose Mayor Chuck Reed and former San Diego Councilman Carl DeMaio, are working with a coalition on a statewide initiative to help local governments make cost-cutting pension reforms.

DeMaio called the proposal a “tool kit” for local officials to “fix the problems in a manner that reflects their community’s ability.” Reed said the proposal would enable “measures that people can do to make their own decisions in their own communities.”

During a break at the Reason Foundation’s third annual Pension Summit in Sacramento last week, the two men said they are “on the same page” and working with a coalition on the details of a proposed initiative for the November 2016 state ballot.

DeMaio said the state constitutional amendment would apply to the state, cities, counties, other local governments, and the University of California — all the “instrumentalities” of California government.

“I’m very big on making certain that when we move ahead on reform that it’s unassailable in the courts,” said DeMaio.

The California Public Employees Retirement System, which opposed pension cuts in three recent city bankruptcies, and the state Public Employment Relations, which tried to block the San Diego and San Jose reforms, would be covered by the initiative.

“They will have no ability but to implement faithfully the voter’s initiative,” De Maio said.

A case in point for local empowerment: A drive led by David Grau and others gathered enough signatures to place an initiative on the ballot last fall to switch new Ventura County employees to a 401(k)-style plan.

But a superior court judge removed the initiative from the ballot, ruling that nothing in the 1937 act covering 20 county pension systems allows them to “opt out or terminate” through a countywide initiative or a vote of the county supervisors.

Empowering the reform process is a big change from past statewide proposals for a specific plan, such as former Gov. Arnold Schwarzenegger’s briefly backed 401(k)-style plan in 2005 or Reed’s lower-cost pension option in 2013. None made the ballot.

“One size doesn’t fit all,” said De Maio.

Reed said a statewide initiative should be “simple and easy to explain.” He said a “big omnibus” pension proposal is difficult to explain and easy for opponents to mischaracterize.

A structural initiative is common ground for a Democrat (Reed) and a Republican (DeMaio) who led the campaigns for two very different local pension reforms overwhelmingly approved by voters in June 2012.

The San Diego initiative, overcoming a PERB lawsuit to keep it off the ballot, switched all new hires except police from pensions to 401(k)-style individual investment plans now common in the private sector.

In San Jose, the reform gave current workers the option, for pensions earned in the future, of paying more or receiving a lower pension. A superior court blocked the option. Reed said other parts of the initiative have saved $80 million to $100 million so far.

Another thing the two battle-tested reformers have in common is experience in laying the groundwork, moving in steps, and not trying to do everything at once, which seems to be the current strategy of the statewide initiative.

Before the big reform in 2012, Reed changed the San Jose pension boards, adding independence and expertise. He backed two successful ballot measures in 2010 limiting police and firefighter arbitration and allowing switches to lower pension plans.

DeMaio backed a ballot measure in 2006 requiring voter approval of pension increases, city council approval in 2008 of a “hybrid” combining a lower pension and 401(k)-style plan, and a 50-50 employer and employee split of pension costs in 2009.


Dozens of government employees picketed the appearance of Reed and DeMaio at the Reason pension summit, an early warning from a coalition of public employee unions that a pension initiative may be opposed at every step, including the first one.

Schwarzenegger dropped his 401(k)-style plan in April 2005 after emotional union television ads contended death and disability would be eliminated for police and firefighters and their families, a claim the governor disputed.

After former Assemblyman Roger Niello, D-Sacramento, filed a pension reform initiative in 2011, the union coalition picketed a luxury auto dealership he partly owned, with one sign saying, “Pensions not Porsches.”

Major donors to a new initiative might face the same campaign tactics. The number of voter signatures needed to place a constitutional amendment on the ballot next year is 585,407, down sharply from 807,615 last year due to low voter turnout in November.

But several million dollars probably would be needed for a signature drive, particularly to screen for false signatures (opponents are sometimes accused of providing) and to gather a surplus as a safety cushion.

A news release from the union coalition, Californians for Retirement Security, said the new initiative is expected to be financed by “Texas billionaire John Arnold, a former Enron executive” who contributed to the Reed and Ventura County initiatives.

In San Diego, paid signature gatherers for the pension reform initiative posted at retail stores were often joined by “blockers,” union members and others who urged shoppers not to sign the petition.

Time and money may be needed for court battles after an initiative is filed. Reed dropped his initiative last year contending that Attorney General Kamala Harris gave the measure an “inaccurate and misleading” summary that made voter approval unlikely.

Dan Pellissier of California Pension Reform suspended a pension initiative drive in 2012 “after determining the attorney general’s false and misleading title and summary makes it nearly impossible to pass.”

Pension reform had strong support in a Public Policy Institute of California poll in January last year. Public pensions were “at least somewhat of a problem” for 85 percent of likely voters, and 73 percent supported switching new hires to 401(k)-style plans.

“Without serious pension reform in California, we face a future of cuts to important services and more tax revenues diverted to unsustainable pension payments,” Reed said in a news release last month.

“It is clear that politicians in Sacramento are not serious about reforming unsustainable pension benefits for government employees, so voters must take the matter into their own hands and impose reform at the ballot box,” DeMaio said.

Dave Low, chairman of Californians for Retirement Security, had a different view in a news release issued by the union coalition last week.

“This new effort is likely to eliminate retirement security for millions of more Californians, worsen economic inequality in our state, and undermine the ability to attract and retain quality firefighters, teachers, police and other public servants,” Low said. “We are confident we can defeat it.”

Originally published by

Reporter Ed Mendel covered the Capitol in Sacramento for nearly three decades, most recently for the San Diego Union-Tribune. More stories are at