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Friday, February 19, 2010

D'oh! Labor-Backed Pension 'Reform' Would Cost City Millions More Than Earlier Estimate.

Posted By on Fri, Feb 19, 2010 at 12:01 AM

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On Wednesday, we reported how a pension reform bill intending to save the city money was affixed with a union-crafted amendment that would actually cost San Francisco more than $13 million annually.

The notion of pension reform actually costing the city more in both the short- and long-term is bad enough (as we've put it before, it's like gaining weight on a diet). But, naturally, this gets worse -- because the city controller's office didn't include all of the relevant numbers in its first calculations. When you do, labor's pension idea would actually cost the city $15 million a year. And those are just the near-term costs.

Well, what gives? Here's the situation: 

We've written plenty about  Supervisor Sean Elsbernd's pension reform plan -- which would have saved the city hundreds of millions of dollars over the next several decades (that sounds like a lot of money -- but, keep in mind, the city will spend billions in pension costs).

At the behest of the SEIU, Supervisor Eric Mar earlier this month amended Elsbernd's plan. The SEIU is one of the only city unions whose members don't contribute to their own pension plan; the city has agreed to do that for them in lieu of providing raises. Mar's amendment called for a "wage swap": Union workers who don't pay into their own pensions would begin doing so at a 7.5 percent clip in exchange for a 7 percent raise.

While, intuitively, this sounds like a good deal, crunching the numbers reveals the city would be out millions. Peg Stevenson, the director of the city's performance group, notes that, for every dollar the city pays toward wages, it actually spends $1.16 because of drains like Social Security, Unemployment, and Long-Term Disability. With this money going to SEIU workers' paychecks instead of their pensions, the city would spend an extra $13.2 million annually.

All accurate so far -- except for the fact that another union that also doesn't pay its own pension costs is the Transportation Workers Union. Stevenson re-jiggered the numbers to include the Muni drivers, and, guess what? If Mar's amendment passes into law, not only will the city be out $13.2 million via the SEIU, Muni's budget deficit will grow by $1.75 million.

It remains to be seen what effect this data has when the supes next argue about Elsbernd's pension plan and Mar's amendments on Feb. 23.

Finally, Elsbernd notes that there is one other group of city employees that would cost San Francisco money by receiving a raise in exchange for making pension contributions. It's not a unionized body, and there are only 11 of them.

It's the Board of Supervisors, of course.
 

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About The Author

Joe Eskenazi

Joe Eskenazi

Bio:
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

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