Workers forced to raise pension contribution under proposal

Drawing down the burgeoning costs of The City’s expensive and draining pension system may be placed in the hands of voters.

Supervisor Sean Elsbernd and Mayor Gavin Newsom are supporting a charter amendment, which will be introduced today for the June ballot, that would tackle The City’s taxing pension system.

For fiscal year 2005-06, The City’s contribution to the pension fund was approximately $175 million. By fiscal year 2011-12, the city controller estimates San Francisco’s pension contribution will be approximately $544 million. The effort to rein in costs comes as The City struggles for the second consecutive year to close a deficit in excess of $500 million.

A number of factors are contributing to a 200 percent hike in just six years in retiree costs, according to a grand jury report issued this year, including the large number of employees available for retirement and “the relationship of public officials and unions who have negotiated extraordinary pension and retirement benefits today, without consideration of the unfair financial burden placed on future generations.”

The proposed charter amendment would force city workers to contribute more help to fund pension costs, mandate that the employee percentage contribution is no longer negotiable, and ensure The City spends a minimum every year on pension costs.  

“For all new hires in the safety category — police, fire, deputy sheriff — those employees will now have to contribute 9 percent of their paychecks, every paycheck into the pension fund, up from 7.5 percent,” Elsbernd said. Other city workers pay 7.5 percent, but he said public safety employees should pay more since “they get a significantly richer benefit much sooner.”

Also, the proposal would mandate the employee contribution  no longer be negotiable. Members of the labor union, SEIU Local 1021, representing the most city workers do not pay the employee contribution as negotiated by their contract. The contract expires in 2011, and Elsbernd said the 7.5 percent would be in the new deal, saving The City $55 million.

It would take a majority of the Board of Supervisors to place the charter amendment on the ballot.
 

jsabatini@sfexaminer.com

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