This is Part I of a three-part series on San Francisco retirement benefits. In the first installment, we will examine “The Good”: the San Francisco Employees’ Retirement System.
By “good” I certainly don’t mean “perfect” or even “not scary,” but I do mean that our system is the envy of other localities. And compared to our retiree health benefits fund (the subject of Part II) the city pension fund is positively fat and happy.
- SFERS provides a “defined benefit,” meaning that when a city employee with at least 10 years of service retires, he or she is guaranteed a certain amount of money each month for life. The amount is based on age at retirement, length of service and final compensation from The City.
- Participants contribute 7.5 percent of their wages to SFERS. The fund itself also (ideally) makes money on investments. To the extent that these two sources aren’t enough to meet plan obligations, San Francisco must fill that gap.
- For fiscal year 2010-11, The City’s obligation is about $325 million. By 2013, that number is projected to be more than $600 million. (Now would be a good time to breathe into a brown paper bag.)
- Schadenfreude is cold comfort, but in case you’re interested, San Diego’s pension fund is $2.1 billion short of its obligations and Los Angeles needs $4.6 billion to be fully funded.
Earlier this month, former SFERS Executive Director Clare Murphy graciously agreed to talk to me about the state of San Francisco’s pension fund. Here’s what she had to say:
How are we doing? We are vigilant as ever with regard to managing the trust’s assets of some $13.5 billion. Despite some recent losses, our pension plan is strongly funded.
Why are we in better shape than other cities? There are two primary reasons for the strength of our fund. First, in San Francisco, changes to retirement benefits have to be approved by voters. Any proposed increase is made very public, and the financial impact is calculated for all to see. Because voters have a long view of city finances, few such proposals are passed. This keeps fund obligations at a moderate level. San Diego and Orange County are looking to copy our system. Second, the retirement board — which oversees the fund — is made up of well-qualified and focused trustees who are committed to thoughtful and responsible investment.
Still, things look pretty grim. How scared should we be? Pension funds have long tails. You can’t isolate this year or even this decade and say, “The sky is falling.” When we look at the fund, we have to project 40 to 80 years in the future; there are going to be some volatile years. Last year, the employer contribution was the equivalent of 9.5 percent of the total city payroll. This year, it will be 13.5 percent. But back in the ’80s, there were times when it was more than 100 percent for safety personnel and almost 20 percent for miscellaneous employees. The fund was established in 1889. It survived the Great Depression and it’ll survive the current crisis.
After 24 years as executive director of SFERS, you’re retiring and only have two days left on the job. Can I get you to say something dicey about your time here? Got any gossip? A list of people you hate? (Laughs.) I still have a continuing responsibility to the people of The City and county of San Francisco.
Eh, it was worth a shot.
San Francisco’s pension fund
|Fund in 2008||$583 million surplus|
|Fund in 2009||$494 million deficit|
Averages, as of July 1
|Age at retirement||Current age||Annual pension|
Firefighters in the hot seat again
Today is the deadline for the Rules Committee to consider charter amendments for the June 8 ballot.
Supervisor Chris Daly’s “zero tolerance for intoxicated firefighters” amendment died in the committee last week because it lacked the support of supervisors Eric Mar and David Campos.
Perhaps the best part of that committee hearing was watching Fire Department Chief Joanne Hayes-White try to politely say: If you put this on the ballot, firefighters will come out in full force to vote down this and all the rest of your stupid initiatives.
We’ll see whether she repeats that threat at today’s hearing, when two more charter amendments aimed at firefighters are considered.
Currently, the City Charter says firefighters may not work more than 48.7 hours per week. Supervisor John Avalos has proposed
an amendment mandating that firefighters work no less than 52 hours a week. The controller’s legislative report says firefighters in places like Oakland and Los Angeles have 56-hour workweeks. That same report estimates that Avalos’ measure would save the city $7 million this year, though it doesn’t say how.
The other amendment being heard today is a proposal from Supervisor Sean Elsbernd that would make a number of changes to The City’s pension system, including an increase in the percentage of salary that police and firefighters have to pay into the pension fund from 7.5 to 9 percent. According to Elsbernd, 9 percent is the industry standard for public safety employees.
Whether either of these amendments make it on the June 8 ballot is anyone’s guess. One thing, however, is certain: City Hall is the safest place in town today.
Quote of the meeting
“I think a lot of the citizens of the city of San Francisco are really, really disappointed that the mayor and the board cannot seem to meet together where the public can actually hear their different proposals [or] make decisions that are joint efforts of this council.”
— Public commenter
— Board of Supervisors President David Chiu, in response
In last week’s column, I mistakenly wrote that the Board of Supervisors Rules Committee was considering proposals regarding firefighters and alcohol use as well as Muni operators’ pay, for the November ballot. The proposals would be for the June 8 election.
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