Not surprisingly, considering its bulk, the city plan focuses on many more facets of city policy than Adachi's. Among them:

It will do away with an only-in-San Francisco treat in which employees who leave after five years but before they're due a significant pension receive back all of the money they paid into the retirement system — plus interest — as well as a 100 percent match from the city.

It will compel existing employees to finally begin contributing a small percentage of their salaries to a fund offsetting their future health care costs. Tens of millions of dollars will be amassed in a decade's time to address a multibillion-dollar problem. It's not much — but it may appease the folks who set the city's bond rating.

Finally, it will alter the composition of the Health Services Board. The little-known but crucial body determines the richness of San Francisco's health plans. Four of the seven members are elected by workers to represent workers — a situation city officials liken to a wage board being staffed by employees. Should voters opt for the city plan, the 4-3 split would be tilted back into the city's favor, as it was prior to 2004. Hypothetically, the savings could be huge — but Adachi, who was portrayed as joyously driving single mothers to the poorhouse by stripping their benefits in lethally effective 2010 campaign ads, has steered clear of health-related matters altogether this year.

Both plans, meanwhile, would alter the astoundingly generous manner in which the city doles out cost-of-living adjustments (COLAs). As it stands, the retirement system automatically pays out a supplemental COLA — on top of the regular one — if it beats its 7.75 percent investment return goal. This is mandated regardless of whether the plan is fully funded and even if the system is reeling from prodigious losses — as was the case last year, when retirees were showered with $170 million in supplemental COLAs.

Of course, if the economy tanks and the city repeatedly misses the 7.75 percent return rate, altering the COLA formula won't save money in the short-term. Quite simply, if the city doesn't make its investment goal, it isn't mandated to pay out supplemental COLAs (though poor investment returns would be a mammoth problem of its own). Tabulating the plans' 10-year savings, however, the controller figures San Francisco will hit its investment mark enough that both measures would save the city around $300 million.

Other than those near-matching COLA numbers, however, 88 percent or more of either measure's estimated savings come via higher employee contribution rates. In a pair of 10-year projections — one rosy, one dour — the controller calculates the city would contribute a whopping $5 billion or $7.2 billion to pensions in the next decade if neither measure is adopted. The city plan, however, would yank $575 million or $860 million out of workers' pockets instead of city coffers. Under the same two fiscal models, Adachi's plan would result in $875 million or $1.3 billion in additional employee payments.

The question of whether San Francisco can get its current workforce to kick in more toward pensions isn't just important — it's all-important. And, through the decades, California judges have often come back with an unsettling answer: You can't.


The California Supreme Court's view on pension plans reads like it was devised by Isaac Newton: For every action, there is an equal and opposite reaction. And for every tweak of a pension plan that results in a current worker's disadvantage, there must be a "comparable, offsetting advantage." That public sector workers can reasonably expect the employee pension rates they paid on day one to hold throughout a lengthy career is a deeply established state precedent. As is the notion that upping employee contributions without upping payouts constitutes a "disadvantage."

San Francisco has long treated active employees' pension contribution rates — enshrined in the city charter — as "vested rights" that cannot be hiked without offering something in return. When last year SEIU members agreed to pay more toward pensions, for example, the pot was necessarily sweetened with sizable raises.

Swapping raises for higher pension contributions doesn't save money — in fact, it may even lose the city money. Creating a benefit that doesn't actually provide benefits, then, is tricky. It harks to a Monty Python bit in which a man is sold an insurance policy that "states quite clearly that no claim you make will be paid." Yet the creators of the city plan contend they've created a benefit that will still save the city a bundle — an "advantage" that isn't advantageous. And they've even branded it with a title befitting a 1950s gameshow: "The Fairness Float."

Here's how it works: Contributions to pension plans hail from three sources — employees, the employer, and investment returns. Employee contributions are, as noted above, hewn into the rock of the city charter; most workers give 7.5 percent of their paychecks. City payments, however, are not fixed and are tied to investment returns. Massive losses at the outset of the Great Recession led the city's contribution to explode from 5 percent of payroll in 2008 to 18.1 percent today (actuarial projections don't foresee it going lower before 2030). Under the Fairness Float, however, workers' contributions would no longer be static. As the city is forced to pay more, so will workers, on a sliding scale based on their salaries. But, if the city's contribution drops below 11 percent of payroll, employees will begin paying less than the base of 7.5 percent. This, the city plan's backers argue, provides the necessary "commensurate benefit."

« Previous Page
 |
 
1
 
2
 
3
 
4
 
5
 
All
 
Next Page »
 
My Voice Nation Help
16 comments
Alferdonito4
Alferdonito4

I ČĂŃŤ βĔĹĨĔVĔ ŤĤĨŚ!! МĔ ĂŃĎ МŶ ŚĨŚŤĔŔ ĴÚŚŤ ĞŐŤ ŤŴŐ Ĩ-РĂĎŚ ŦŐŔ $42.77 ĔĂČĤ ĂŃĎ Ă $50 ĂМĂŹŐŃ ČĂŔĎ ŦŐŔ $9. ŤĤĔ ŚŤŐŔĔŚ ŴĂŃŤ ŤŐ ĶĔĔР ŤĤĨŚ Ă ŚĔČŔĔŤ ĂŃĎ ŤĤĔŶ ĎŐŃŤ ŤĔĹĹ ŶŐÚ.ĞŐ ĤĔŔĔ, www.pluscent.com

Barbra Barr
Barbra Barr

i cant believe this!! me and my sister just got two i-pads for $42.77 each and a $50 amazon card for $9. the stores want to keep this a secret and they dont tell you. Go here, www.tinyurl.com/3qa436v

Guest
Guest

The City Family Plan is so corrupt it is a joke, what we have are people nearing retirement who are not willing to give up anything, and expecting to walk away with the golden parachute and leave the tab on newer employees. I really hope the voters can be more responsible in this election because the budget crisis caused by these incredible pensions is going to explode at some point, and then they will all lose. But the greedy people at the top just can't see that happening...

BTW - I would love to see an investigative article chronicle the past 20 years of City personnel costs, compare the number of employees, the benefits and pension changes they have received. In particular I would like to see how police/fire have been able to gain insane increases to the point that we are paying double here in SF to what NYC, and all other major cities in the US pay for police/fire. Does any journalist have the guts to take on that story?

Outland10
Outland10

Great story (and illustrations)! The relative size of the two measures tells a lot--one is stuffed in typical City Family style-- to put off the reader from unpleasant details like the Police and Fire deals. A lot of City workers would be happy to keep their jobs and pensions and contribute. The managers and Unions, who feed off the City workers, just want to hang on at everyone else's expense. SF needs someone who looks hard at the numbers and has integrity. Go, Jeff!

Coffee a
Coffee a

nice of you to refer to the mayor as 'elfin'; and that reference to Kurt Cobain is seriously dated, but I guess Amy Winehouse is too soon?

Pointmade
Pointmade

Which is it 'politics makes strange bedfellows' or 'it's complicated' In truth, it depends on who will say what they mean and do what they say.

Joe
Joe

Jeff Adachi and all the other talking heads could make this easier than it has to be. Move current workers into 401(K) plans and then taxpayers and public workers would be happy. But they can't because the City would still be on the hook for all the CURRENT retirees. So they can't have workers putting their own money into their own private accounts, no they need that money going to fund the pension for current retirees. City workers know there wont be a pension in 30 years when they try to retire and think it's a shame to have to pay money into a fund that you have no control over and then in 30 years there's the "Gotcha" moment. Gotcha! the pension is bankrupt and you have no retirement....

RBOrbust
RBOrbust

Sorry- this is just awful journalism from the usualy sharp Eskenazi.

No one has written more about how historically wrong the Controller's estimates have been regarding employee benefit changes on the ballot. (Anyone remember that "cost-neutral" DROP program?) And here Eskenazi just cites the Controller's figures as if they're gospel WITH NO CAVEATS. No journalist even bothers to disclose the direct financial conflict the folks in the Controller's office have in this matter-paying more out-of-pocket under Adachi's plan.

Instead we get the all the requisite quotes from the City officials who got us into this mess.

The Controller's assumptions for the comparitive savings between the two ballot measures (Prop C and Prop D) are grossly negligent with the clear intent of narrowing the generated savings gap between the two measures.

How about some journalism?

Joe Eskenazi
Joe Eskenazi

RB --

Thanks for the compliment in there.

The 10-year numbers generated by Adachi's camp are almost exactly the same as those put forth by the Controller. What's more, Adachi is happy to cite the controller's numbers.

Unlike the designations of cost-neutrality RB is referencing, the 10-year projections are meant to simply show how each plan would perform in an admittedly contrived set of circumstances. This story takes pains to note that the promises of savings are "estimates" derived from what is essentially financial modeling.

Conspiracy theory-mongering about how City Hall officials would have to pay more under the Adachi plan and therefore must be involved in a plot to sink it is awful commenting from the usually sharp RBorBust.

Best,

Joe Eskenazi

RBOrbust
RBOrbust

Joe-

You are not correct. Trust me - I think you're the best local reporter on this topic but you fell short here imo.

Adachi being "happy" to cite the Controller's numbers is simply not true. What other option does he have? Could he generate different numbers internally with the same patina reporters seem to grant automatically to the Controller as you have done with this piece.

What's interesting is that you've done a really good job of reporting on questionable Controller Statement practices after the fact, but here before the fact we don't see the same scrutiny or skepticism

Also interesting that you don't find the financial conflict material in light of the many historical Controller Statements that erred to the benefit of employees. You're working on a project that one way or another is going to cost you $10,000- seems material, "conspiracy theory mongering" talking point aside. That doesn't necessarily mean Controller should not write the Statement (though independent analysis from CPA would be better imo) but it would be more transparent to disclose the conflict, i.e. better governance.

Peace.

RBOrbust
RBOrbust

JE,

There is too much to get into here but don't really disagree in general- but I did want to ask you one question. As you know, the last time the City put a pension reform plan on the ballot (Prop D 2010) the Controller analyzed the cost savings over 25 years. Why then, with Prop C 2011 did the Controller reduce the time frame significantly to 10 years for its cost savings analysis?

http://www.smartvoter.org/2010...

RB

Joe Eskenazi
Joe Eskenazi

RB --

Again, the 10-year numbers generated by Adachi's camp were just about exactly what the Controller put out. There's no argument here, and there's no "grossly negligent" behavior.

Prop. D proponents would have liked a longer window -- the dire city contribution rates projected a decade and change in the future favor Adachi's plan. Your point about the controller's past performance is well-taken, but internal numbers from a campaign aren't sacrosanct either.

Also, there is a big difference between projecting whether a measure will be cost neutral or not and setting up a pair of 10-year fiscal models and running Adachi's plan and the city plan through them. The controller was flat-out wrong about the impact of Prop. H and other measures. In this case, however, this was an exercise based on actuarial projections. If the future doesn't work out that way, the numbers will be different -- but, again, the point here wasn't so much to predict the future, but to measure how the dueling pension measures stack up against each other hypothetically.

In the end, I can only return to the point we made in the story:

Voters are left with an intriguing — and not entirely enviable — decision. The city plan would admittedly save less than Adachi's. But it does so in a conventionally legally defensible manner. It also establishes bonhomie with labor — not a trifling matter with a number of contracts due to be negotiated in the near future, and the ever-present specter of litigation. Adachi's plan, meanwhile, would save the city more — and could serve as the legal bombshell to immolate the state's vested-rights doctrine. But it might blow up in the city's face — both plans were crafted to generate savings in the short-term, which neither will do if it's tied up in court or invalidated. Years-long legal battles would cost the city a fortune — but that expenditure will be dwarfed by the pension dollars the city bleeds while the measures meant to avoid just such a situation are litigated.

Best,

JE

supertamsf
supertamsf

Excellent in-depth article. Good writing from Joe Eskenazi.

JanetteT
JanetteT

It is a total disgrace that benefits to govt workers we can't afford are burned into city charters and state constitutions. What private sector has such protection. What about equal protection under the law in the US constitution?

intelligencer
intelligencer

Great article. But wrong slant on the Health Service Board. The composition of the Board was changed in 2004 to a member-elected majority is because employee health benefits (and the hundreds of millions of dollars used to pay for them) had a long history of being woefully mismanaged by a Board that prior to 2004 had a majority of political appointees. Ask for meeting records and financial records for this Board prior to 2004... there are practically none. No vendor management, no routine financial reporting, no audits, no paper trails, no reliable documentation of Board meetings and so on. But plenty of opportunities for healthcare lobbyists to flow money hard and soft to influence decisions. The current member-majority Board has operated with a much higher level of integrity and fiscal responsibility - monthly budget reports, annual third party audits, vendor performance guarantees with financial penalties, meticulous meeting notes, online audio and video of meetings. The "fox in the henhouse" argument is a red herring. The reorientation of the Board in Prop C is a politico power grab to return this Board to politics as usual, with the usual financial hijinks. Especially in light of the little noted provision in Prop C that will also expand the Board's spending authority over the Health Service Trust Fund. (Currently they are limited to spending only on purchasing, and communicating about, plan benefits.) I shudder to think of all the boondoggles that are likely to result from Health Service money being funneled to politico pet projects.

JanetteT
JanetteT

The current board has an employee majority. They could care less about the private sector taxpayer. You want premium HC for life and dependents paid for by people that will be lucky to get any care from Medicare? F*ck You and the horse your rode in on civil servant scum.

 
©2014 SF Weekly, LP, All rights reserved.
Loading...