Purportedly working out of his kitchen in a Piedmont cul-de-sac, Summer — who, in a brief phone interview, declined to answer most of SF Weekly's questions — cooked up numbers that led to his being sued, simultaneously, by retirement boards in Kern County and Fresno County, and by the San Joaquin Valley Unified Air Pollution Control District. Lawyers representing retirement boards in North Miami Beach and Palm Bay, Fla., told SF Weekly they, too, would likely have sued Summer — if he hadn't allowed his insurance to lapse, making the likelihood of collecting a judgment infinitesimal. Legal papers filed by the Fresno County Employees' Retirement Association accuse him of running a "sham company" out of his home — a firm with "a long and exotic history of failing to ensure that they have the assets or insurance necessary to satisfy the many claims against it."

In late 2006, Summer was sued first by Kern County and its retirement board and then by San Joaquin. Kern County accused him of severely overestimating the plan's withdrawal rate — that is, the number of people who would leave it. This led to the county heavily underfunding its pension system. Meanwhile, San Joaquin claimed that Summer's actuarial prediction of the cost of upping its pension benefits was off by $580,000 — in its first year of implementation alone. In 2008, judgments were leveled against Summer's company, Public Pension Professionals, to the tune of $8.5 million for the Kern County retirement board; $17.4 million for Kern County; and $1.4 million for San Joaquin. Anne Holdren, the executive director of the Kern County Employees' Retirement Association, said a settlement has since been negotiated in which Summer pays $1,000 a month to both the county and the retirement association.

As Summer was being buffeted by lawsuits, he was brought in by the Police Officers Association to help on its DROP. In the early months of 2007, union members met with city officials in an attempt to sell them on instituting the program. But when the city asked to see Summer's analysis, they were brushed off. Some who attended these meetings recall union members vouching for his work, stating that the numbers surely added up, and assuring that this wouldn't be another DROP disaster. City officials claim that they were told "trust us."

No one is claiming the police union didn't believe its claims of cost-neutrality. But "trust us" didn't cut it. The union got around the city by independently placing DROP on the ballot via paid signature-gatherers. By late 2007, Summer did produce an actuarial paper regarding the San Francisco DROP — but not before being sued by yet another pension system.

The Fresno County retirement association claims that for years, Summer contravened three decades of county policy and basic actuarial principles. He pushed costs onto employees that were traditionally shouldered exclusively by the retirement system — and, according to the subsequent lawsuit, failed to inform the retirement board of this step. As a result, the system was compelled to pay back millions to workers — with interest — and claims Summer's creative accounting led to a $99 million discrepancy. In 2009, Fresno accepted a $250,000 settlement — the best it figured it could get, considering the actuary's dicey insurance situation.

Summer, an MIT graduate, laughed out loud when asked whether his troubled background was relevant to his involvement in San Francisco's DROP. "It doesn't make my work in San Francisco a question anybody should care about," he says. "The fact there was a lawsuit doesn't necessarily mean there's anything wrong."

Summer continued to be a sought-after speaker at financial seminars, and obtained public sector work during and after his legal battles. He did so even after the Conference of Consulting Actuaries took the exceedingly rare step of publicly reprimanding him in 2009. (It claims he refused to assist an actuary who discovered a serious error in calculations Summer had made on a plan he formerly administered. The reprimand also notes that Summer was "repeatedly unresponsive" to communications from the Actuarial Board for Counseling and Discipline, which was investigating the case.)

The actuary's 2007 forecast for San Francisco's DROP, incidentally, is far from definitive. It offers scant analysis to back the plan's purported cost-neutrality, instead stating that "cost neutrality is almost impossible to obtain," and "Sometimes, real-world experience does not match actuarial projections." The latter is a statement with which a number of Summer's former clients would be inclined to agree.

Delagnes says he had no idea Summer was being barraged by successful lawsuits for gross negligence in the midst of his work on the city's DROP. But he says the actuary's pattern of bad decisions that led municipalities to bleed millions again and again doesn't mean the same thing will happen here: "Just because he was sued doesn't mean everything he ever did was wrong."


At the very least, it was exceedingly convenient for the Police Officers Association that a supposedly cost-neutral solution for a serious city problem would lead to massive additional payments to its most longstanding members. On the face of it, floating such a plan past the city — the lack of any political opposition made a ballot proposition a slam-dunk — seems to be a spectacularly counterintuitive feat. But it isn't. In fact, it's a textbook example of how government works — that textbook being The Logic of Collective Action by Mancur Olson.

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27 comments
Lacey
Lacey

This is really good, i think this gonna help them a lot

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online dating

Jonnie Bangkok
Jonnie Bangkok

SFPD = Organized Criminals!

Bend over and spread those cheeks Frisco taxpayers and prepared to be reamed bareback!

Royrayford
Royrayford

As a cop with 15 years, most in the Tenderloin, I gotta say this is a pretty good article. I read this leftist BS rag because you must know your enemy. This article however seems fair and lets the reader decide what he/she thinks about SFPD staffing and only has a bit of bias. Nice work SFWeekly and no Im not eligble for DROP.

swampthing2010
swampthing2010

Wow is right! Organized crime at it's finest. And yet people wonder why the state and all its municipalities are broke.

milkcluber
milkcluber

SFPD says an academy class costs about $5 million with $4 million going for salaries and benefits. But that’s for a class of 50. The DROP program allows captains and higher ranking officers, not just patrol officers, to participate. So basic math tells you the DROP program does not end up cost neutral.

Anon
Anon

No, the drop program does NOT allow high ranking officers to participate. In LAPD, yes you can. In SFPD, the highest rank is a Sergeant. Maybe a Lieutenant, but they have to give up their status as a commissioned officer.

Milk- the DROP information is free from the SFPD. Go look it up.

insider
insider

Officers in drop can do up to three year depending on their rank, patrolman up to three years, Sgt. & Inspectors up to 2 yrs, and Lt. & Capt. only one year.

PappaBear
PappaBear

Cost-neutral? Probably. What a lot of people aren't considering is the hiring cost of a large department like this, which after all the testing probably could cost between $3-$8K. Then there's the fallout rate from those who didn't make the academy or FTO, let's say for example 10 recruits per year don't pass FTO, that's close to $1,000,000 lost to the city if you include benefits. That brings me to my final point, benefits.

People forget that there are health benefits and contractual benefits associated to each employee, at a cost separate from their salary, which probably could run in the neighborhood of $25K per year, per employee. A salaried employee making $110,000, actually costs the city $135,000 per year, right? So to not pay additional benefits to a NEW employee probably makes the "cost-neutral" argument valid.

There should probably be some sort of measured productivity for DROP employees though, so they can't park it in an alley for 10 hours?

Madness
Madness

Whoa whoa, the $110,000 that Mr. Eskenazi quoted is our total salary + health benefits/retirement contributions made by both us/city.

Academy pay was about $72k for us, and I think that made it around 90 with everything factored in. But until you get off of probation you are subject to get fired "with or without probable cause" so to speak. In my Academy class we had 52. After completing everything (7 months academy, 4 months field training, and 12 months probation), we're down to around 24. Factor that against keeping some a couple older guys, it might be cheaper to keep them on, than put numerous classes through the hiring cycle, academy, etc only to keep half.

Joeyjuicebox
Joeyjuicebox

Actually Pappa Bear is right. ANY job be it government or private entity that offers health, dental and vision has an unseen cost to the employee. Say you make $35K/year or $200K/year, and you get all the good bennies, that stuff ain't free, even though the employee doesn't pay it, the city or Wal Mart or Dr. Shivago's office does pay for it. That's how total compensation is calculated, which is why Pappa Bear and the SF POA's point of view may be somewhat accurate in that it could be cost neutral.

Regardless, it will be interesting to see what the controller reports tomorrow.

John
John

It boggles my mind to try and wrap my head around how any tax paying citizen can think this is a good idea. I work in the private sector and recently did my 2010 taxes...what makes me angry is not the money I paid last year but knowing that I'll have to scrape by and save every penny I possibly can from now until at least age 70 hoping I'll be able to retire by then with no safety net what-so-ever and no guarantee that I'll ever be able to retire. Then I read an article like this and realize that the money I'll have to pay every year for the rest of my life will be funding a lifestyle for people that can retire at 55 or 60 roughly, get a big wind fall of my money that I'm working hard for and then get a pay check to sit around for the rest of their 30-40 years riding on my back while I'm still working. This is the reason so many of us in the private sector are so angry and don't want to see higher taxes as we KNOW there is still a lot of fat to cut! No gaurantee for us but death and taxes while the (pampered) people in the public sector get the golden parachute.

Greg Bayol
Greg Bayol

BTW - Double dipping" is the practice of getting two retirement checks each from a different job. Not unusual and nothing wrong with it. The alternative to the practice described in this article would be to hire new employees to do the work. So where would there be any savings. Why not have experienced people in these jobs. As long as public employees are being paid, there will be some right-winger opposed to it.If police pay is so great, go ahead and apply.

David
David

Greg, the "savings" would be not paying these people double--their regular pay (at the top of their pay scale) and their pension. Though you'd have to still pay other officers to replace them, these would be at starting salaries and at substantial savings. As to "right-wingers" not liking it, you can't point that one at me.

RBorBust
RBorBust

What is it going to take to get Police and Fire (wages 35% above Bay Area counterparts) to stop draining the City treasury? I cannot think of another example of persons taking an absolute reservoir of good will and exploiting it for financial gain. Just awful.

Joe, why are you letting the Controller's office (Ed Harrington, again) off the hook here - you know, the standard ballot understatement of the cost of new employee benefits to taxpayers/the voting public. The Controller stated it was "probable" the DROP program would meet its goal of being "cost-neutral."

People should be sketical they'll get an honest answer from the Controller's office as to the cost of the DROP program given the Controller's long history of misleading statements on employee benefit costs. It's how we got into this mess in the first place.

Piv2442
Piv2442

San Diego is the poster child for DROP. Started in 1996 as a payback for underfunding the pension fund. It is still in place but not available to new hires. Did I mention San Diego is basically bankrupt. Pension fund is underfunded by at least $2B

Ex_cop
Ex_cop

OK, so let's say they didn't do this, and the police department had to hire new officers. Know how much it costs to train a new cop? The initial hiring is a written and physical test, a psychiatric interview, an oral board. Then the academy. Then FTO. They're making a salary this entire time, plus taking up the time of several officers to train them. So yeah, in the long run, it probably WAS cost-neutral, they kept good cops on the force, and the city stayed protected. The naysayers are just jealous that THEIR career doesn't allow THEM to do this!

Taxpayer
Taxpayer

Just one thing to add here...training should be a fixed cost. The police force will always retire officers hence there always needs to be a crop of new ones being trained. Paying the experienced ones twice the amount of money to stay on a few more years does nothing to help with the training of new officers. In the end you have paid double salaries to current officers and you you still don't have anyone to replace them. In the short term it sounds good because you're wiping out the cost of training but in the long term you still need to do the training which is still going to cost money. Training = Fixed cost, paying double salaries = stealing

Chambers
Chambers

Great Points! However you miss a very important one...when that recruits fails the academy or FTO, the city just lost all of that money. Academy classes usually start with 50 officers. After the academy and FTO are done you average 30-35 officers.

B4its2late
B4its2late

Yes, I agree great job Joe. Sadly, your article makes my skin crawl, when I look around and see the mess my generation ( baby boomer ) is leaving for future generations to clean up, it makes me want to scream, shout and cry. Everything bad we may have said about our parent's greedy generation has been compounded by us by 100Xtimes. Yes it's me and you which includes everyone whether red or blue. We wanted to close our eyes and pretend that our double dipping, asking outrageous prices for homes (that we inherited) and not paying our fair share of taxes, wasn't going to catch up to US. How can we look into the faces of our children and not cringe, when our actions created a future that is both bleak and dark.Let us start here and now by sitting down and working together to find real solutions and make serious reparations for our mistakes. This includes government and private employers, employees, union and non-union, retirees who retired before their time, those receiving pensions, recipients of entitlement big and small or expect too.

h. brown
h. brown

Averages?

Average cop at 55 or more years of age with 30 years service makes around $185,000. That makes them eligible for a pension of $166,500. So, that's $351,500 they're raking in with the pension money guaranteed a 4% return on interest. Plus, of course, health insurance adds minimally another $36,000 a year. And, there's your COLA and when the fund wins (no matter how insolvent) a year on Wall Street, you get a bonus.

I've been writing about this since I first saw the legislation in 2008 and been ignored. The one thing I can't get anyone to do (including you, Joe Eskenazi) is to print the total payment to an average cop in this program. It exceeds $400,000 a year.

Neither Columbo, nor Dirty Harry is worth that kind of money.

That's over $1,000 a day.

Anyone wanna take me up on my numbers?

Giants win with Wilson striking out side in 9th!

h.

Puleeeez
Puleeeez

It is mind blowing that people like yourself can spew out made up numbers and want to be taken seriously. A patrol man's base salary is $102,000. After 30 years and at the age of 55 one can take a pension of 90% of the base salary. Base Salary, that's it. Is DROP a good idea? Maybe, maybe not. But lets look at the real numbers, not make up our own.

Chambers
Chambers

"I've been writing about this since I first saw the legislation in 2008 and been ignored" Because your NUMBERS are ALL wrong. Like the post said, more like 108,000 - 110,000 a year.

Ex_cop
Ex_cop

How much do those Giants make per year? How many lives do they save? How many criminals do they put behind bars? I'd rather do without the Giants than do without the police.

Barfo
Barfo

$185,000 per year for the "average cop"-I don't think so. On the average for a large city in this state it's more like $108,000.

Jaime1007
Jaime1007

Just put a link to your comments, I want to read more

 
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