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ANN SMITH LETTER ON LEGAL BENEFITS Thursday, September 27, 2007 9:49 AM Dear ALL: I trust you have heard about or read the Union Tribune article today
related to the Mayor's request for Council support in retaining outside
counsel to file a declaratory relief action related to certain pension
benefits. As you know, during the bargaining in 2005 which led to MEA's current MOU with the City, a number of concessions were made which included changes in pension benefits for new hires after July 1, 2005. Those changes included (1) ineligibility for DROP; (2) ineligibility for purchasing service credits; (3) ineligibility for a "13th check;" and (4) no retiree health insurance coverage paid by the City. The same changes were agreed to by AFSCME Local 127, Firefighters Local 145, and the Deputy City Attorneys' Association. Since the City and the POA did not reach agreement on a new MOU, the City imposed its "last, best and final" offer on police officers. As you also know, there are many City employees who are not represented by any Union and, therefore, the terms of their employment are not set by any MOU and/or any "last, best and final offer" when negotiations fail to yield an agreement. However, while an MOU is a binding agreement between the City and a labor union, certain promises and/or concessions contained therein require additional legislative action to become law. Thus, any changes to the City's pension plan - which is codified in the San Diego Municipal Code (SDMC) -- must be made by Ordinances enacted by the City Council. [City Charter section 141.] To become effective, each such Ordinance requires two readings and is subject to referendum. And, pursuant to City Charter section 143.1, any such Ordinance which affects the benefits of any employee under such retirement system must be approved by a majority vote of the members of the system before it can become law. Despite repeated entreaties to the City Attorney's Office to prepare an Ordinance which would satisfy these legal requirements in enacting into law the pension plan changes bargained in 2005, the City Attorney failed and refused to prepare such an Ordinance until February 2007. Had the City Attorney's Office prepared the Ordinance for Council action in June 2005, it would have become effective before the prospective new hires to be impacted by it became employees on and after July 1, 2005, and, thus, no vote of plan participants would have been required under the City Charter. But this did not happen due to the City Attorney's neglect of duty. Accordingly, by the time action was taken, hundreds of new employees were already on the payroll - their benefits having "vested" on their first day of employment based on the contents of the then-existing plan document (i.e., the SDMC) - and no vote of plan participants was ever taken to approve an Ordinance affecting those new employees' benefits. In defending his own neglect of duty, Mr. Aguirre argues that the delay was of no consequence and that the MOUs between the City and certain Unions was sufficient to change the pension plan terms for ALL new hires on and after July 1, 2005 - whether represented by any Union or not - and despite the clear and unambiguous Charter requirements that pension plan changes be made by Ordinance and, under certain circumstances, be voted on by plan participants. SDCERS' General Counsel says "not so." This is the legal dispute on which the Mayor is asking for Council support in retaining outside counsel to file a declaratory relief action to determine whose legal position is correct on this issue and thus eliminate debate and uncertainty for all concerned. I will keep you posted regarding developments on this issue. Best regards, Ann Smith |