Nine times out of 10, I agree with Melissa Griffin’s political and legal analysis. As an attorney, I do not agree with her Tuesday analysis of propositions C and D.
Griffin provides an accurate representation of the current state of California contract law and adequately explains the current “vested rights” theory as it applies to current employees’ retirement contribution levels. It is in her application of this law to the facts of Prop. C and D and her subsequent conclusion, however, where she falls short of the mark.
Prop. C, unlike Prop. D, requires increased employee contributions when The City or taxpayer is paying more, and, importantly, reduces the employee contribution as The City or taxpayer contribution falls. Griffin argues that employees will have to work until 2030 until they see reduced contributions, and, as a result, the promise of Prop. C is false.
This flawed analysis ignores a few key points.
First, Griffin relies on stale retirement projections that do not take into account the pension fund earning over 12 percent in FY 2009-10, and over 20 percent in FY 2010-11. Both of these returns far exceeded the assumed rate of return, and will bring the reduced contributions for The City or taxpayer and for city employees in line far sooner than 2030.
Second, let’s use my personal situation as an example. Should Prop. C pass, I will begin paying an increased contribution, over and above 7.5 percent of my paycheck, beginning July 1, 2012. I will be leaving city employment upon the expiration of my term as a supervisor on Jan. 8, 2013.
Per Griffin’s analysis, I would be able to sue The City and argue that Prop. C violates my vested rights by increasing my contribution level during the last six months of my city employment, and I would not receive the comparable benefit of reduced contribution levels because those levels would not kick in until after I had left city service.
I find it very unlikely that a court would find this nominal period of increased pension contributions — six months — to be a real violation of my vested rights. In exchange for that short period of time of higher contributions, I will be receiving the benefit of a far more secure pension system.
Additionally, The City would also argue, in response to my baseless lawsuit, that case law requires the court to evaluate whether there is a compensating advantage for all disadvantaged employees, and not just certain groups of employees.
In other words, it is inaccurate and nearly impossible to evaluate the proposal based on when a specific employee like me decides to leave city service. The merits of Prop. C need to be looked at in its entirety, not simply in the vacuum of one employee or one group of employees.
Finally, while term limits are forcing me to leave city employment in January 2013, there is nothing that could stop me from returning to city service in the future. The same can be said for nearly any city employee who decides to retire. Any court would be hard-pressed to find The City in violation of the “vested rights” theory simply because that employee made the personal choice to retire while increased employee contributions were in place, as opposed to waiting for the comparable benefit of the decreased employee contributions to commence. A court cannot expect The City to craft legislation that meets the particular, individual retirement desires of all its employees. Rather, case law clearly states that the entirety of the proposal needs to be analyzed.
As Griffin says, Prop. C and Prop. D both venture into “uncharted legal waters.” In the end, however, Pro. C does so in a solid, America’s Cup-worthy yacht ready to take on all legal challenges. Prop. D is akin to a life raft peppered with holes that will sink once the first swell comes its way.
Sean Elsbernd is a member of the San Francisco Board of Supervisors.