Pin It

Labor-Backed Plan for "Smoothing" Pension Plans Deemed Illegal 

Wednesday, May 4 2011

With as many as three different pension reform charter amendments clogging this year's ballot, it's now more obvious than ever that there's no easy way to solve the city's runaway benefits situation. It also turns out there's no smooth way.

One of the highlights of the plan developed by the city's organized labor movement was extended "smoothing." In essence, this lowers the massive yearly contribution the city and its employees pay into its pension system by spreading the losses suffered by the pension system over a longer period of time (to be fair, it would also spread gains over more time — but that's not exactly the situation the city finds itself in these days). Labor had hoped to lengthen the smoothing period from five years to 10; at its most basic, this would have doubled the time the city allots itself to pay down its obligations to the fund.

Whether this is a wise fiscal move is debatable — it's akin to attempting to lose weight by altering the measurement system of the scale. But whether it's legal is less so.

The notion of voter-mandated pension smoothing set off "instinctive alarm bells" for Supervisor Sean Elsbernd. He asked City Attorney Dennis Herrera about it, and, late last month, Herrera's office forwarded Elsbernd a 2005 state attorney general's opinion. In a remarkably prescient precedent, California's top attorney opined that, no, the city charter cannot be used to make detailed policy for a city's retirement system. That's the job of the retirement board. Elsbernd sits on that body as well, and he did not seem eager to use an accounting trick to alleviate the city's pension obligation. "San Diego's [retirement] trustees made some actuarial changes and did some chicanery to benefit the city's general fund instead of the pension fund — and they're the ones who are civilly liable now," he says.

The pension proposals put forth by labor and Mayor Ed Lee will likely be hashed out by the Board of Supervisors until late summer. But the smoothing proposition, having been declared illegal by the city attorney, cannot be brought before the board at all.

Smoothing's rough road was an opportunity for a chuckle by pension crusader Jeff Adachi. The public defender — now the Lord Voldemort of organized labor — unearthed the AG's ruling independently. He notes that, absent the possibility of smoothing, labor's estimation its plan will save the city $100 million is due for some smoothing of its own.

About The Author

Joe Eskenazi

Joe Eskenazi

Joe Eskenazi was born in San Francisco, raised in the Bay Area, and attended U.C. Berkeley. He never left. "Your humble narrator" is a staff writer and columnist for SF Weekly, which he has written for since 2007. He resides in the Excelsior with his wife, 4.3 miles from his birthplace and 5,474 from hers... more


Subscribe to this thread:

Add a comment


  • Arcade Fire at Shoreline
    Arcade Fire opened their US tour at Shoreline Amphitheater to a full house who was there in support of their album "Reflector," which was released last fall. Dan Deacon opened the show to a happily surprised early audience and got the crowd actively dancing and warmed up. DEVO was originally on the bill to support Arcade Fire but a kayak accident last week had sidelined lead singer Mark Mothersbaugh and the duration of the west coast leg of the tour. Win Butler did a homage to DEVO by performing Uncontrollable Urge.
  • Comic Con 2014

    Comic book enthusiasts, Cosplayers, TV and movie fans, and celebrities descended to sunny San Diego for the annual gathering at Comic-Con International.

    Whether hitting up a panel to check out The Simpson's announcement of a cross over with Family Guy or Futurama. Or hearing a new movie with Sam Raimie based on a video game or accidentally rubbing shoulders with Daniel Radcliffe (Harry Potter) in cosplay, being a cosplayer, San Diego Comic-Con is the place to be. Photographs by Christopher Victorio

Popular Stories

  1. Most Popular Stories
  2. Stories You Missed