Public employee pension plans garnered nationwide attention as the recession chipped away at city financial reserves, and Menlo Park was no exception. With CalPERS faltering, the city could find itself facing a multi-million dollar bill for its pension benefits, because taxpayers must make up any shortfall.
The City Council explored pension reform in May, but Measure L is the result of a grassroots drive to let voters decide how to proceed.
Measure L seeks to raise the minimum retirement age for new public employees, excluding police officers, by five years to 60, and also decrease their maximum pension benefits by 0.7 percentage points to 2 percent of their highest annual salary averaged over three years, multiplied by the number of years employed by Menlo Park.
Under this measure, a new hire who retired at age 60 after working for the city for 30 years would receive 60 percent of that average salary. Current employees could retire at age 55, and get 81 percent.
If a city worker chooses to retire earlier, they would be eligible for reduced benefits.
Employees will pay at least 7 percent of their salaries toward retirement, with the city providing a matching amount.
Finally, Measure L prohibits retroactive increases in pension benefits for any employee, current or new. Its supporters say this clause is designed to prevent a reoccurrence of 2007, when the council awarded a 35 percent jump in benefits, retroactive to an employee's first day on the job.
Councilman Heyward Robinson, who voted for the increase, said in exchange public employees agreed to forego a 5 percent raise, which saved the city $200,000.
Supporters of the initiative pointed out the "instant pension liability" of $6.3 million incurred by the increase demolished any savings.
A key question is who has the legal authority to alter the structure of a city's pension plan — the voters, or only the City Council? One provision of Measure L is that future benefits could only be increased by a simple majority of voters — not by the council.
The Nov. 2 election may indicate how Menlo Park voters would answer that question, although those opposed to Measure L have filed one lawsuit questioning its legality, and may do so again if the measure passes.
A pre-election suit sought to keep the initiative out of the hands of voters, but on Aug. 27 San Mateo County Superior Court Judge George Miram allowed the ballot measure to proceed.
The judge said in his decision that the government code that allows voter input on pension systems "raises serious doubt as to whether the Legislature intended to foreclose voter involvement in pensions as the petitioners argue."
City Council candidate Chuck Bernstein helped organize the grassroots campaign by the Citizens for Fair and Responsible Pension Reform that gathered more than 3,100 signatures, enough to get Measure L on the ballot.
Two unions, Service Employees International Union Local 521 (SEIU) and American Federation of State County and Municipal Employees Local 829 (AFSCME), filed the lawsuit to argue that only the City Council has the authority to change pension compensation.
Judge Miram rejected that argument, stating that they didn't prove that voters aren't allowed to "instruct their city representatives," but left open the possibility of post-election review.
Menlo Park City Attorney William McClure estimated the cost of defending a lawsuit after the election at $25,000 to $60,000. Those against Measure L find the cost to be a great reason to vote against it. On the flip side, the grassroots coalition intends to keep fundraising for a legal defense, and arranging pro-bono attorneys to support the city.
"Would you really alter doing what is right because you might have to defend it?" asked Henry Riggs, who helped collect enough signatures to put the pension initiative on the ballot. He thought the potential savings of Measure L made the cost of a lawsuit worthwhile.
The City Council voted unanimously in May to switch to a "two-tier" pension system with the same benefits that Measure L provides on public employees belonging to SEIU. However, the switch only takes effect if the city negotiates the same deal with the city's mid-level managers when their contract expires next year.
While all council members and candidates support pension reform, not all endorse Measure L. Only two current officeholders, John Boyle and Andy Cohen, agreed with placing it on the ballot.
Incumbents Rich Cline doesn't support the measure, while Mr. Robinson opposes it, saying it wouldn't solve the problem of how the city can afford to pay for pensions and it ties the hands of future councils.
Councilwoman Kelly Fergusson said Measure L may force the city to switch the pension plan for new hires from CalPERS to another system with higher administrative costs and lower investment returns.
However, supporters of the initiative said that was unlikely. Mr. Riggs said the measure is intended to match the CalPERS "2 percent at 60 years" plan. "We can have a judge formally acknowledge that was the intent. [Mr. McClure said it shouldn't be an issue."
So if the council already passed a "2 at 60" plan, why does the city need Measure L? Precisely because it ties the hands of future councils, said Mr. Riggs.
Without the measure, councils could revert to higher pension benefits whenever union contracts come up for renegotiation. Letting voters decide reduces pressure on council members to cave in to union demands, and also ensures that people who don't stand to gain from any increases — the voters — have a chance to participate in the process. Measure L may also have a trickle-down effect that puts pressure on the rest of the system to bring benefits down to a sustainable level.
The website for "yes on Measure L" lists many supporters, including former mayors Lee Duboc, Dee Tolles, and Paul Collacchi. Of the six City Council candidates, the four non-incumbents back the initiative.
But none of the six candidates received endorsements from SEIU, the AFSCME, or the San Mateo County Central Labor Council (SMCLC). "Our focus in Menlo Park is on the defeat of Measure L," said Julie Lind, political director for the labor council.
The unions are likely behind a city-wide telephone poll conducted the last week of September that attempted to discredit Measure L, according to Mr. Riggs. He also expects a mid-October surge in attack ads.
Others campaigning against the measure include former mayor Gail Slocum, Commissioners Jim Tooley, Carolyn Clarke, and Michelle Wangberg.