Let It Bleed

The city is awash in red ink, thanks to billion-dollar benefit giveaways and our politicians' lack of will.

Voters, it seems, don't read the fine print before heading to the ballot booth. The City Attorney does — and his office pointed out that the Prop. H pledge of "cost-sharing" does not necessitate a "dollar-for-dollar" correlation, meaning any contribution from police and firefighters could theoretically satisfy the law. The language of the law allowed the public safety unions to enjoy a risk-free reward. Taxpayers are picking up costs incurred by Prop. H although they were assured they wouldn't have to.

But the most cynical manipulation of a real effort to address the city's nightmarish finances came via Prop. B of 2008. That measure finally curtailed the city's ruinous five-year vested health care policy. City employees hired after January 2009 must now work 20 years to enjoy lifetime health care. In the long run, this will save the city billions. Yet in the sausage factory of San Francisco legislation, the proposition also included hefty pension and Cost-of-Living Adjustment increases for city employees — not just for the future employees who would be subject to more modest health care stipulations, but the current workforce, already enjoying the city's generous health provisions. 

The effects of this switcheroo were staggering. While the proposition will ostensibly save San Francisco a bundle in the far future — when city employees from the Justin Bieber generation retire — in the near-term, it will cost the city billions. A 2008 actuarial report of the San Francisco Employee Retirement System revealed that the Cost-of-Living Adjustments alone increased the city's pension obligation by $750 million. In order to close a billion-dollar loophole, San Francisco saw fit to toss billions into a new loophole of its own creation.

Public Defender Jeff Adachi acknowledges he may be committing “career suicide” by pushing Prop. B.
Eartha Goodwin
Public Defender Jeff Adachi acknowledges he may be committing “career suicide” by pushing Prop. B.

It's astounding — but it shouldn't be. In San Francisco, when labor asks to change a twenty, it always gets back three fives and a ten. 

A funny thing happens when you confront San Francisco officials with these budget-destroying numbers and history of abuse. They don't offer a solution: Instead they point out, uniformly, that our system is presently doing better than a lot of systems in California.

They're right. San Francisco's retirement system is almost certainly the best in California. We can keep telling ourselves this, even after they come to repossess the doorknobs.

The problem isn't how bad things are now, though they're lousy. The problem is how bad things will be in just a few years. The universal excuse that we're better off than Detroit is not a solution — it's like the captain of the Titanic pointing out that the Lusitania sank faster.

But this assumes that elected officials want a solution. No evidence suggests they do. Vanquishing Prop. B, Adachi's benefits reform measure, is the rare cause that has united Mayor Newsom and Supervisor Chris Daly, along with every other elected official, and platoons of campaign staff paid with union money — and none of them has presented an alternative for even beginning to address the city's problems. Instead, they have a message: Won't somebody think of the children?

At a recent No on B rally, organizers said Adachi's real goal was to harm city employees' kids, and that he'd cleverly disguised a measure to do so as "pension reform." It's true that Prop. B will increase health care costs, especially for city employees with dependents. The measure's critics repeatedly cite that a single mom would be forced to bleed an extra $5,600 yearly, should Prop. B pass. That's accurate — but it applies to less than 1 percent of the city's workforce, who are on the costliest plan the city offers, and likely have the option of switching to less expensive plans. Even with new costs demanded by Prop. B, a city worker could insure herself plus a dependent for $249 a month through Kaiser, or $473 with Blue Cross. That's not astoundingly cheap, but it's significantly better than most plans in the private sector.

And isn't that the way it's supposed to be? Prop. B opponents are quick to point out that a strong benefits package is what attracts people to civil service in the first place. Government work can't compete with private sector on salary.

That was true when everyone liked Ike. But today's city employees significantly outearn most of San Francisco's private sector workers. According to the Bureau of Labor Statistics, the average private sector employee working in San Francisco earns $73,133. The average city employee now draws $91,500 — with fringe benefits valued at $38,000.

Okay, but that giant public sector salary comes by averaging Gavin Newsom ($247,825) with Larry the airport janitor ($56,454), right? Yes, but it's still representative. According to the fiscal 2009-10 payroll, 62 percent of San Francisco employees took home more than $75,000.

Their pensions can be even better. According to Civil Grand Jury analyses, 55 percent of firefighters and 60 percent of cops who retired between 1998 and 2008 now earn pensions higher than their final salaries. Thanks to Cost-of-Living Adjustments and other postretirement sweeteners, some retirees have been bumped into a higher tax bracket than when they were working.

In total, some 900 retirees earn yearly pensions of $100,000 or more, and nearly 2,400 receive $75,000. Payouts for these top earners exceeded $234 million last year (all told, 22,200 retirees cashed $744 million). Former Police Chief Heather Fong is the city's No. 1 pensioner at $265,558 a year — and she's only 54. So most public sector employees are doing pretty well for themselves, and some are doing spectacularly well — and on average, they're all doing significantly better than private sector workers.

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