Though the process may not have been perfect, San Rafael city leaders say they did no wrong when they approved employee pension enhancements without proper public notice, despite allegations by the Marin Civil Grand Jury that the law was broken.
The San Rafael City Council on Monday voted 3-1, with Councilman John Gamblin dissenting and Councilwoman Kate Colin absent, to approve the city’s response to the grand jury report, “Pension Enhancements: A Case of Government Code Violations and A Lack of Transparency.”
The report asserts that the city violated public notice and disclosure rules in 2002 and 2006 and that such violations might jeopardize existing pensions. The report also called for responses from the Board of Supervisors, Novato Fire District and Southern Marin Fire Protection District.
In its response to the grand jury, the city disagreed, saying though it didn’t fully comply with a Government Code Section 7507 requirement to publicly disclose future costs of pension increases through actuarial reports within two weeks of adoption, the city substantially complied with the law. The city hired independent counsel Colantuono, Highsmith, Whatley PC, based in Penn Valley, for $375 an hour to assist with the review.
Public notice
The city only gave a few days’ public notice before adoption, but that is not grounds to retract the benefits, the city’s response states. Officials believed at the time that adequate public notice was provided by making city meeting agendas available 72 hours in advance, Mayor Gary Phillips said.
“We did everything else in accordance with the requirement,” Phillips said. “We weren’t aware of 7507 or else we would’ve done that too.”
Phillips, who was on the council at the time the pension enhancements were approved, said the process was done differently in those days. It was spearheaded by a financial officer and human resources director who were not fully aware of Section 7507, he said.
Gamblin said he disagreed with the grand jury’s findings and doesn’t think pension enhancements should be tossed out. But because the city didn’t provide two weeks’ public notice as required by law, officials should be forthright and say that they didn’t comply, he said.
“I don’t believe in gray lines,” Gamblin said. “I think it’s one way or the other. If we didn’t comply, we didn’t comply. To say we substantially complied or complied within spirit, I don’t think that’s what the grand jury is looking for or what our constituents are looking for. We need to own up to the mistakes made.”
Violation denied
According to the grand jury report, released April 16, the city erred by using the same actuarial evaluation report for nine pension increases and failed to publicly disclose proposed increases for each bargaining unit. The reports did not review the proposed increases for each bargaining unit and the evaluations were used years later, the grand jury report states. The actions, jurors contend, contributed to the unfunded liabilities of the Marin County Employees’ Retirement Association.
City officials responded they approved not nine, but two different pension enhancements: a single, uniform pension enhancement for all public safety employees and another for all non-safety employees.
The council “approved them bargaining unit by bargaining unit over the course of four public meetings in 2002 and 2006,” the response states, and noted that “this sequential implementation” did not violate Section 7507.
City officials said they got all estimates of future annual costs of the enhancements, according to the response. Nothing in Section 7507 requires future annual costs be separated among the bargaining units as suggested in the grand jury report, according to the city’s response.
Since 2002 and 2006, city officials said they have added a series of subcommittees and other modes of oversight to ensure the process is transparent. In 2012, the council created a pension and other post-employment benefits subcommittee, made up of Phillips and Councilman Andrew McCullough. The next year, the subcommittee appointed a citizens’ group on pension reform. A web page that includes pension and retiree health care information and the city’s actions and financial condition was created in 2013 and is accessible on the city’s website.
Pension critics
Monday’s meeting drew dozens of pension critics who turned out to hear the city’s response.
Jody Morales, founder of Citizens for Sustainable Pension Plans, said she has been unhappy with how government agencies called out in the grand jury report have all responded in the same fashion — by hiring attorneys who have said that although there wasn’t full compliance, there was enough.
“They all relied on their attorneys’ definition of substantially complied, meaning they didn’t really comply,” she said. “They did a little and it was good enough” for them.
Morales said neither she nor the grand jury want a retraction of pension benefits. They just want the cities, the county and the special districts named in the report to admit wrongdoing.
Morales’ group hired its own attorney, Margaret Thum, to review the grand jury report and to construct a response, and Morales said she’s content it appears the San Rafael City Council read that response, unlike the Board of Supervisors.
“What’s wonderful about the council, they asked probing questions, particularly Andrew McCullough and John Gamblin,” Morales said. “They obviously have read the letter they gave them from our attorney.”
City Attorney Rob Epstein said this week that approval of the grand jury response was a smooth and fair process. The city, he said, made a good call by obtaining outside review and counsel from a source not affiliated with the report.
“I felt the hearing last night was a full and fair explanation of what transpired — both the basis for our proposed response to the grand jury and the opportunity for members of the public interested in having their viewpoints heard and truly considered by the council,” Epstein said.