By Marc Garman (with numbers help from Paul Norberg)
The Vallejo Police Officers Association is suing the City of Vallejo in Solano County Superior Court. Their complaint primarily seeks redress for cuts made to retiree medical benefits(among other things) during Vallejo’s Bankruptcy and asks the court to issue a writ of mandate to compel the city to act. The writ of mandate is a request by the VPOA to have the Judge order the city to change the terms it imposed during or after bankruptcy. The complaint from VPOA was initially filed in October 2013 and has been amended since then. There appears to have been a delay while a determination was made as to who would hear the case. A hearing date has finally been set for December 2014 in Fairfield in the courtroom of Judge Paul Beeman.
The VPOA Position (roughly)
The VPOA is seeking action from the court for the following reasons as they see it:
- The City violated the California State Constitution when retiree medical benefits were modified limiting them to $300 per month. (The cap of $300 per month was ultimately arrived at through negotiations with all bargaining units except police as a condition of the city’s 5 year Plan of Adjustment to exit bankruptcy. It was subsequently imposed on VPOA at the December 16, 2013 city council meeting.)
- The City violated the Meyers Milias Brown Act by declaring impasse in contract negotiations prematurely.
- The City violated the city charter when contract terms were imposed by city council on VPOA. VPOA feels that the failure to seat new councilmembers Malgapo, Dew and Verder-Aliga at the December 16, 2013 council meeting, during which the vote to impose occurred constitutes a “lapse of ministerial duties” on the part of the city as well as a charter violation.
Note: There are some questions regarding the standing of VPOA in representing retirees. The argument could be made that they cannot represent retired members because they are no longer part of the same bargaining group. This logic could also apply to new hires on a second tier benefit system leaving employees on the old 3%@50 system (some of the most highly paid municipal employees in the City of Vallejo, state and entire nation) as the only ones who would benefit. The arguments on both sides of this point are sure to be heard at length and expense in the courts.
Thoughts on the VPOA Position:
Point one: Recent events in Stockton’s bankruptcy case, while not precedent setting at this time have shaken some of the precepts surrounding protections afforded employee benefits by the California State Constitution. Judge Christopher Klein, presiding over Stockton’s Chapter 9 has opined that CalPERS (California Public Employee Retirement System) benefits are not sacrosanct in Bankruptcy and may be subject to modification. This position challenges the widely accepted definition of constitutionally protected (vested) benefits.
The circumstance in the Stockton case is very different from the Vallejo bankruptcy. Stockton does not want to modify the employee retirement benefits. It is instead creditor Franklin Templeton Investments, one of Stockton’s bond holders that is pushing against the protected standing of retirement benefits for the obvious reason of protecting their interests. Stockton’s lawyers (actually Marc Levinson…same lawyer Vallejo had) have argued that reducing promised pension obligations or breaking with CALPers would cause irreparable damage to Stockton’s ability to attract or retain employees. At any rate, unless Stockton acts based on Judge Klein’s position resulting in a ruling, there will be nothing here to set legal precedent. Interesting position with some interesting parallels to Vallejo, especially in light of the VPOA action. Add to this the fate of pensions in the Detroit bankruptcy and the water looks a little muddy.
Point two The city declared impasse in negotiations and imposed a $300 per month cap on the VPOA retirees in addition to reduced benefits for new hires. Claiming that the city declared impasse prematurely is pretty much de rigueur for these sort of things. Goes hand in hand with the claims of impairment the employees’ ability to exercise their rights and language cautioning public agencies not to “interfere, intimidate, restrain, coerce or discriminate public employees because of their exercise of rights.” Everyone who is unhappy about an imposed contract claims premature impasse.
Point three: The cops are pissed at their inability to get return on investment from the JumpStart candidates: Dew, Malgapo and Verder-Aliga. VPOA contributed $25,000 to the JumpStart slate, IAFF(International Association of Firefighters local 1186) contributed $19,500 and the Napa Solano Central Labor Council (Executive Director Jon Riley) contributed $10,510.
The liability for fully paid retiree medical was 40% of the VPOA payroll prior to bankruptcy. By reducing the payment to $300 per month the cost to the city was reduced to 7% of payroll. The unfunded actuarial valuation of the VPOA retiree medical benefit was $65 million under the old fully paid plan. By reducing the benefit to $300 the unfunded liability was reduced to $12.4 million. A reduction of $52.6 million.
The VPOA must have been pretty sure that Dew, Malgapo and Verder-Aliga would vote their way. A return of $52.6 million for an investment of $55,010 is pretty good by anyone’s estimation.
While the ethical questions surrounding the modification of promised benefits are not entirely without merit (Nobody really wants to do that.), there is also the question of how unfunded benefits got to be so absolutely positively huge as to swallow municipal budgets whole. The outright purchase of elected officials by any special interest group; union, corporate or otherwise is so broadly and systemically prevalent in American politics as to be unremarkable…which in itself is a sad statement on governance and democracy in this country. Buy the people who approve your wages and benefits and they will represent your interests rather than those they are elected to represent. And with a bigger pool of money to draw from you can grow a fatter war chest to buy more people in positions of influence who will return the favor by fattening your coffers and so on and so on yadda yadda yadda in a perpetual cycle of self enrichment protecting a selective gold plated socialism for the privileged few at the expense of the many. (Most of you reading this qualify as the many.) But this is old news and if you don’t get it, you’re not paying attention.
Make no mistake about it. This is likely to be expensive if the city wins, and a major push towards a second bankruptcy if we lose. The special interests need to chip away at the Vallejo decision in order to protect their status quo. That’s what this is really about.
Documents filed with the court are below. The city’s response is still pending at this time.
You can also see case information on The Solano County Superior Courts website by entering case ID FCS042492