San Diego’s Pension Reform Bodes Well for Carl Demaio

Original post date: October 10, 2013
Article by: Anonymous

Carl DeMaio is one controversial congressional candidate. He served from 2008 to 2012 as city councilman of San Diego, where his ideas for pension reform became popularized, and he is also a policy analyst at the Reason Foundation where he writes about government reform. DeMaio is openly gay as well as a Republican, though he chooses to keep social issues off of his platform. This decision cost him the support of the mostly Democratic gay and lesbian community when he ran for mayor in 2012. Although many politicians and citizens of San Diego supported his pension reform plans, his reluctance to take a stand on social issues may have cost him the race. Nevertheless, his experience reforming municipal pensions is important for understanding the practical realities of pursuing public pension reform at the state and local level, including Florida.

DeMaio’s electoral loss last year has not stopped his political career; DeMaio began fundraising for a campaign for Congress in the 2014 election. His platform consists largely of government reforms to promote accountability, and the most prominent area he would like to reform is public pensions for the city workers of San Diego. He is the founder of The Performance Institute, a “nonpartisan think tank dedicated to improving government through transparency, accountability, and performance.” In fact, his “Pension Reform Initiative” passed in San Diego with an overwhelming majority of votes in June 2012.  The reform gives new hires a 401k-style retirement fund, rather than the current defined-benefit pension plans that employees are receiving now.

DeMaio emphasizes the fact that public workers are receiving pensions that far exceed those in the private sector and have astronomical costs to taxpayers due to the paucity of contributions made by employees. The current pension system is unsustainable, and, as the case of San Diego showed, citiescannot afford to continue paying its retired employees as much as it keeps promising them. DeMaio would like to see public pensions more closely resemble those in the private sector, with defined contributions rather than defined benefits, and a pensionable salary amount within the range of a typical taxpayer. This would make the pension system more stable and less dependent on the market, which does not always yield returns as high as the projections.

DeMaio’s market-oriented platform has amassed much support from Republicans; according to a recent poll by ABC10News, 48% of voters in San Diego would choose him over his opponent, Scott Peters, in the race to be elected Representative of the 52nd district in California. (13% of voters were undecided). Now that he has laid down the foundation for a sustainable city pension program, DeMaio is focusing on government accountability and transparency. Perhaps in the next few years DeMaio’s Pension Reform Initiative will be successfully implemented, and San Diego will serve as a model for reforming pension systems nationwide as well as in Florida.

About DeVoe Moore Center

The DeVoe L. Moore Center is conducts economic research and policy analysis focused on state and local policy issues and is located in the College of Social Sciences and Public Policy at Florida State University in Tallahassee. As an educational institution the DMC provides professional research experience to undergraduate and master’s students through an extensive program of internships and independent study, preparing them for a future in public policy, economic development, public sector accountability and entrepreneurship.
This entry was posted in Fiscal Policy, Politics and tagged , , , , , , , , . Bookmark the permalink.

One Response to San Diego’s Pension Reform Bodes Well for Carl Demaio

  1. Al Moncrief says:

    THE POWER OF COLORADO POLITICAL PARTIES: A CASE STUDY.

    (The Incredibly Intricate Colorado PERA SB10-001 Political Web.)

    In 2010, the Colorado Legislature enacted a bill (SB10-001) that ultimately and retroactively eliminated public pensioner contractual rights to pension inflation protection provisions in Colorado law.

    I find a few interactions in this web of relationships surrounding SB10-001 particularly noteworthy:

    Colorado Supreme Court Justice Hood contributed to Democrat Bill Ritter’s campaign for Governor, and “hosted campaign events” for Ritter.

    Governor Ritter initially appointed Justice Hood to the bench.

    Governor Ritter signed SB10-001 into law.

    Democratic Governor Hickenlooper appointed Hood to the Colorado Supreme Court.

    Justice Hood upheld SB10-001 as a member of the Colorado Supreme Court.

    Justice Hood has worked with attorney Mark Grueskin at Isaacson Rosenbaum, P.C.

    Justice Hood was a shareholder at Isaacson Rosenbaum in 2006.

    Isaacson Rosenbaum worked for Colorado PERA during this time period.

    Attorney Grueskin represented the SB10-001 defendants.

    Attorney Grueskin has provided legal representation for the Colorado Democratic Party.

    Justice Hood has been recused or removed in a separate case due to his association with Attorney Grueskin.

    In 2010, the Colorado Legislature enacted a bill, SB10-001, designed to reduce unfunded pension liabilities of the Colorado PERA pension system by cutting the statutory COLA inflation protection of pensioners (called the “annual benefit increase” [ABI] in Colorado law.) These public pension liabilities had accumulated over time, since “actuarially required contributions” to the pension system have been underpaid since 2002. Ninety percent of the “cost savings” in the bill, SB10-001, are the result of cutting the pensioner’s statutory ABI (COLA.)

    http://coloradopols.com/diary/66099/the-incredibly-intricate-colorado-pera-sb10-001-political-web

    Naturally, given Colorado’s case law, Colorado PERA pensioners challenged the bill in court as a violation of their contractual rights. Lawyers for the defendants in the case (the State of Colorado and the pension system, Colorado PERA) began by arguing that the contract breach and reduction of the PERA ABI (COLA) were “actuarially necessary,” but soon abandoned this legal strategy. Later in the litigation the defendants switched their legal strategy, and simply argued that the contract right to the PERA COLA did not exist. (Inconveniently, Colorado PERA’s lawyers had already testified to the Legislature that it did exist. December 16, 2009, Colorado PERA officials in written testimony to the Joint Budget Committee: “The General Assembly cannot decrease the COLA (absent actuarial necessity) because it is part of the contractual obligations that accrue under a pension plan protected under the Colorado Constitution Article II, Section 11 and the United States Constitution Article 1, Section 10 for vested contractual rights.”

    http://www.kentlambert.com/Files/PERA_JBC_Hearing_Responses-12-16-2009_Final.pdf)

    But, the Denver District Court’s Judge Robert Hyatt ruled against the plaintiffs (PERA pensioners,) deciding the case (Justus v. State) without citing Colorado’s on-point public pension case law (Bills/McPhail.) The Colorado Court of Appeals reversed the Denver District Court finding Colorado case law “dispositive” as to the contractual rights of the PERA pensioners to the COLA benefit. Ultimately, the Colorado Supreme Court reversed the Decision of the Colorado Court of Appeals, embracing the Denver District Court decision that failed to even mention the on-point case law, (Bills/McPhail.)

    Thus, Colorado state government acted to eliminate billions of dollars of Colorado state government debt. Colorado taxpayers are pleased, and Colorado politicians have more money to spend on their favorite projects.

    The myriad political connections, the legal, lobbying and public relations campaigns that ultimately resulted in the enactment and judicial blessing of the Colorado PERA COLA reduction bill, SB10-001, provide an excellent example of political action at the Colorado Legislature, and the power of Colorado political parties. I am astounded at the intricacy of these political connections. Perhaps you will be too.

    The connections include the interaction or collaboration of former Governor Ritter, Attorney Mark Grueskin, Colorado Supreme Court Justice Hood, former Colorado Supreme Court Justice Dubofsky, Governor Hickenlooper, the Colorado Education Association, the Colorado Coalition for Retirement Security, Colorado unions, and Colorado PERA administrators and trustees.

    The PERA COLA reduction bill, SB10-001, was supported by a group called the Colorado Coalition for Retirement Security. The Colorado Coalition for Retirement Security and Attorney Mark Grueskin:

    Articles of Incorporation for a Nonprofit Corporation for the Colorado Coalition for Retirement Security filed with the Colorado Secretary of State:

    http://www.securepera.org/wp-content/uploads/2013/01/Art-of-Incorporation-filed-7.30.12.pdf

    “Address: 3087A Tejon Street.”

    “Registered Agent: Lynea Hansen.”

    “The true name and mailing address of the incorporator are:”

    “Heizer Paul Grueskin LLP.”

    http://www.securepera.org/wp-content/uploads/2013/01/Art-of-Incorporation-filed-7.30.12.pdf

    The true name of the incorporator of the Colorado Coalition for Retirement Security is the firm of

    Heizer Paul Grueskin LLP?

    What is (or was) the relationship between Secure PERA (also known as the Colorado Coalition for Retirement Security,) the Colorado PERA pension system, and this law firm? Has Colorado PERA paid the law firm for services relating to SB10-001?

    The Colorado Coalition for Retirement Security and Governor Hickenlooper:

    It seems peculiar that the Colorado Coalition for Retirement Security has had the same street address as Colorado Governor Hickenlooper’s political campaign:

    http://tracer.sos.colorado.gov/PublicSite/SearchPages/CandidateDetail.aspx?SeqID=16370

    Political Consultant Lynea Hansen, the Colorado Coalition for Retirement Security, and Governor Hickenlooper, from Mediatrackers.org:

    “When liberal communications strategist Lynea Hansen took the over the reins of BlueFlower from Taylor in early 2009, the filing violations continued. What changed was the address on the fund’s place of business. The official mailing address for the BlueFlower Fund changed from 8092 E. 8th Place, which was Taylor’s Denver home, to 3087A Tejon St. in Denver. This address also happened to match that of Gov. John Hickenlooper’s campaign committee, the Colorado ASSET bill advocacy page, the public affairs contact for the Colorado Education Association, the Secure PERA network, and a gaggle of other Democratic campaigns. Many of these groups paid Hansen for consulting or financial reporting services.”

    http://mediatrackers.org/colorado/2012/07/11/liberal-campaign-group-in-colorado-repeatedly-failed-to-file-required-financial-reports

    “Lynea Hansen, executive director of the Colorado Coalition for Retirement Security.”

    http://www.governing.com/topics/finance/gov-states-search-retirement-security-obama-myra.html

    “Lynea Hansen, Senior Vice President at Strategies 360.”

    http://www.cspera.org/CSPERA-NLAug2014.pdf

    “Lynea Hansen, from the Colorado Coalition for Retirement Security (CCRS). CCRS, also called Secure PERA, was founded in 2006 to work with PERA and the State Legislature. The coalition has 8 member organizations as follows: AFSCME Colorado (American Federation of State, County and Municipal Employees), American Federation of Teachers Colorado, Association of Colorado State Patrol Professionals, Colorado Association of School Executives, Colorado Education Association, CSPERA – Colorado School and Public Employees Retirement Association, Colorado WINS (Workers for Innovative and New Solutions,) and Friends of PERA. As you can see, our parent organization, CSPERA, is a member of the coalition. Lynea Hansen runs the Secure PERA website and works very hard to keep PERA strong. She also makes it very easy for all of us as PERA retirees to keep abreast of issues and news regarding PERA, as well as what is happening in the legislature regarding PERA.”

    http://ppspera.org/wp-content/uploads/2013/12/14-01PPSPERANewsletter.pdf

    Attorney Grueskin and the Colorado Education Association:

    “Mark Grueskin, best known in education circles as a lawyer for the Colorado Education Association . . .”

    http://www.ednewscolorado.org/news/capitol-news/gaming-bill-debated-delayed

    Colorado Education Association and SB10-001, from the Colorado PERA website:

    “In Colorado, Senate Bill 1 passed with the support of the Colorado Coalition for Retirement Security, which brought together Friends of PERA (which includes PERA members and retirees), the Colorado Education Association, the Colorado School and Public Employees Retirement Association, AFSCME Colorado, the American Federation of Teachers Colorado, the Association of Colorado State Patrol Professionals, the Colorado Association of School Executives, and Colorado WINS.”

    http://www.copera.org/pera/about/ask.htm

    A former AFSCME Colorado official on SB10-001:

    “The entire AFSCME endorsement of screwing public employees out of their pension COLA’s in Colorado is unfortunately quite true, however, it should be remembered that AFSCME no longer represents Colorado State Employees, and it hasn’t for about 7 years now. It was decided 7 years ago in a backroom deal in Washington that the three state employee unions would become Colorado WINS. The rank and file members of AFSCME Locals in Colorado were not given the right to vote on this, nor were the members of CAPE or the CFPE. The people who espouse ‘democratic labor trade unionism’ in America, wouldn’t allow it to take place in Colorado. Ritter and company granted a an exclusive franchise to Colorado WINS (which is a subsidiary of SEIU) and Colorado State employees do not have the right to belong to any other union, as both Change To Win and the AFL-CIO have prevented other unions (such as the CWA, which has had a consistent record of fighting for public employees’ pensions) from organizing. Thanks to their betrayal of Colorado State employees, Colorado AFSCME Council 76 is now a bankrupt shell of an organization that represents some county employees in Pueblo, city employees in Aurora, the remnants of Denver City employees Local 535 and 158 and the maintenance staff at DU. They have one ‘assistant Executive Director’ and two clerical workers for a staff. All they are is a paper tiger, shell organization that is used as a conduit to ‘move money’ in state elections.”

    Attorney Mark Grueskin and the Colorado Judicial Project, from WestWord:

    “In the meantime, Grueskin is still in the process of getting the Colorado Judicial Project on its feet; when asked if the CJP would have a web presence, he laughingly admits, ‘I don’t know. We’ve chatted about a number of ways to help educate the public — but you’ve got a roomful of lawyers, for crying out loud. So we have dissenting and concurring opinions, but no decision.'”

    http://blogs.westword.com/latestword/2010/05/mark_grueskin_matt_arnold_tang.php

    Former Supreme Court Justice Jean Dubofsky and the Colorado Judicial Project:

    “ . . . Matt Arnold appeared on the Your Show television program [moderated by Adam Schrager,] debating former Colorado Supreme Court justice Jean Dubofsky [my note, author of the 2009 Colorado PERA “COLA-taking” legal opinion] representing the ‘Colorado Judiciary Project’ [a legal-establishment special-interest group formed by Democratic state party attorney and Mark Grueskin.]”

    http://www.clearthebenchcolorado.org/tag/devils-advocate/

    Former Colorado Supreme Court Justice Jean Dubofsky and Colorado PERA:

    Jean Dubofsky, at the request of Colorado PERA, provided PERA with a legal opinion arguing that the Colorado Legislature could legally take Colorado PERA retiree pension COLA benefits: “at request of PERA (Public Employees Retirement Association) in 2009, provided legal opinion that general assembly could repeal automatic 3% cost-of-living adjustment for retirees without violating their vested rights;”

    http://lawweb.colorado.edu/files/vitae/dubofsky%20.pdf

    Colorado PERA General Counsel Greg Smith, December 17, 2009 – “We have obtained outside counsel’s opinion on this issue.”

    http://www.kentlambert.com/Files/PERA_JBC_Hearing_Responses-12-16-2009_Final.pdf

    In a deposition Jean Dubofsky submitted to Colorado PUC she notes that she is the author of a legal opinion addressing the legality of reducing the PERA COLA benefit, October 18, 2010:

    “My most recent legislative experience (within the past two years) is . . . a legal opinion addressing the constitutionality of reducing the cost-of-living increase for PERA recipients.”

    (To access this document, paste “Colorado PUC E-filing system PERA legal opinion Jean Dubofsky” into Google.)

    Colorado PERA’s Greg Smith on Colorado PERA pension benefits:

    “His [Colorado PERA General Counsel Greg Smith’s] briefing paper said ‘there has never been a finding in Colorado that the state has reserved its power to make changes’ in PERA’s benefit structure.”

    “The PERA board, however, relying on a legal opinion by General Counsel Greg Smith, thinks benefits cannot be cut for any active PERA member. That means not just current retirees and workers who are eligible to retire but the brand-new employee who has put less than a year of contributions into the plan.”

    “Smith argued, however, that there is no precedent for declaring an actuarial emergency unless a pension fund has a serious cash liquidity problem.”

    http://m.rockymountainnews.com/news/2005/aug/17/span-classdeeplinksredpart-four-the-pera-puzzle/

    Greg Smith, Colorado PERA’s former General Counsel told us in a Denver Post article from November 30, 2008: “The attorney general’s opinion seems clear that fully vested employees — those retired or with enough years of service to retire — cannot see any benefits reduced, including cost-of-living adjustments.”

    Link: http://www.denverpost.com/news/ci_11105271#ixzz0eEZGoxly)

    Read the complete article and support the Rule of Law in Colorado at saveperacola.com.

    Like

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s