Local 829, American Federation of State County and Municipal Employees, AFL-CIO v. City of Menlo Park (Super. Ct. San Mateo County, 2012, No. CIV-508435.)
Like most California public entities, the City of Menlo Park has struggled with the ever-increasing burden of post-employment benefits. In an effort to address this, the City’s voters placed an initiative on the November 2010 ballot that would limit pension benefits for new city employees and require voter approval for any future labor agreement providing pension benefits exceeding those established by the measure.
Two of the City’s unions, AFSCME and SEIU, brought a pre-election challenge to the measure in San Mateo County Superior Court. The Court rejected this attempt to stop the election, concluding that the Unions failed to meet their burden of proving that the measure was clearly invalid, and allowed the measure to be put to the voters. More than 70% of the electorate voted to approve Measure L.
After the election, the Unions renewed their challenge. They first argued that the measure is invalid because Government Code section 36506 delegates exclusive authority over employee compensation – including pension benefits – to the city councils of general law cities. The Court rejected this argument, concluding that section 36506 does not divest the voters of their constitutional right of initiative with respect to pension benefits because, in Government Code section 45306, the Legislature specifically contemplates a role for direct voter input in the establishment of local pension systems. The Court held that because Measure L creates a new tier of pension benefits for employees hired after the measure’s effective date – rather than modifying benefits for current employees – it fits squarely within the voters’ authority under section 45306.
The Unions next argued that Measure L conflicts with the bargaining obligations imposed by the MMBA, claiming that the measure prevents the City from bargaining in good faith with an open mind over pension benefits. The Court also rejected this claim, holding that Measure L is no different from a statute passed by the Legislature placing limits on public employee pension benefits, which the Unions conceded would be valid. The Court explained that a law constraining the pension benefits available to local public employees has no effect on the City’s duty and ability to negotiate in good faith within those constraints and thus does not conflict with the MMBA. Moreover, the Court found that the City had negotiated in good faith with the Unions over pension benefits both before and after the passage of Measure L.
While an appeal is certainly possible, this well-reasoned trial court decision is good news for public agencies that plan to rein in growing pension obligations. Most critically, the Court’s view that voter-imposed constraints on pensions do not violate the MMBA addresses a point frequently raised by opponents of pension reform both in general law and charter cities and counties.
 Government Code section 45306 states: “The ordinance establishing a retirement system may be adopted either by a majority vote of the electorate of the city or by approval of a two-thirds majority of the legislative body of the city. The ordinance shall not be repealed except by a vote of the electorate.”