Protect Our Benefits v. City & Co. of San Francisco
Annotate this CaseSince 1996, retired employees of the City and County of San Francisco) have been eligible for a supplemental cost of living allowance (COLA) as part of their pension benefits when the retirement fund’s earnings from the previous year exceeded projected earnings. In 2011, voters passed Proposition C, an initiative measure that conditioned payment of the supplemental COLA on the retirement fund being “fully funded” based on the market value of the assets for the previous year. POB, a political action committee representing the interests of retired city employees, challenged the amendment as an impairment of a vested contractual pension right under the contract clauses of the federal and state Constitutions. The court of appeal held that, with respect to current employees and employees who retired after the supplemental COLA went into effect, the full funding requirement cannot stand. Employees who retired before November 6, 1996 had no vested contractual right in the supplemental COLA; the 2011 amendment may be applied to their pensions. The court rejected POB’s claim that the full funding requirement must be set aside because the Board of Supervisors failed to obtain an adequate actuarial report before placing Proposition C on the ballot.
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