San Francisco’s 26,000 city employees have been granted generous salaries, benefits and pension plans by the taxpayers of this city who support their hard work.
More than one-third receive in excess of $100,000 when overtime and unused vacation are factored in. They also receive generous health care plans, pensions and other benefits totaling tens of thousands of dollars more per employee.
Pension costs have nearly tripled to $357 million in the past decade, while retirement health care costs have quintupled to $156 million. The City’s unfunded pension liability is potentially $4.4 billion, and the unfunded retirement health care liability is an additional $4.3 billion.
To pay for all of this, the general-fund budget is being squeezed, resulting in less money for police and fire protection, mass transit, road maintenance and social services, along with increasing pressure to raise taxes and fees.
It has been realized by all involved that taxpayers can no longer carry the majority of the burden for such generous packages. Unions, politicians, the business community and taxpayers agree that change to the structure of our benefits is necessary to the long-term financial health of The City.
There are two propositions on the November ballot, C and D, that begin to rein in excessive city employee benefits. While both are a vast improvement over the status quo, there are several good reasons for voting for Prop. C and against Prop. D.
Foremost among them is the fact that Prop. C reduces both health care and pension costs, while Prop. D deals only with pensions. Prop. C requires all employees to contribute to their retirement health care. And it restructures the Health Service System Board that oversees the retirement plans, providing more control by city administrators that could help keep down costs.
Another factor in Prop. C’s favor is that it is the result of a collaboration including city officials, employee unions, business and civic leaders and legal and pension experts. Prop. D, on the other hand, was crafted by a small group led by Public Defender Jeff Adachi, whose previous pension reform effort was rejected by voters. More reforms will be needed in the future, and Prop. C sets the table for that collaborative process to continue.
Either proposition could face legal challenges, but the chances are significantly greater with Prop. D because it requires increased employee contributions but does not provide offsetting benefits, potentially flouting case law.
Prop. C requires employee pension contributions to increase when city contributions increase to offset investment losses. But when the economy is booming, employee contributions are allowed to decline along with city contributions.
Prop. C also reforms the benefits for the 1,000 employees, mostly sheriff’s deputies, who are covered under the California Public Employees’ Retirement System. Prop. D ignores these employees, retaining the costly status quo.
Likewise, Prop. C reins in vested retirement benefits for short-term employees, while Prop. D ignores another expensive problem.
The strongest argument for Prop. D is that it reduces pension costs more than Prop. C, perhaps an extra
$30 million to $40 million per year. But that equates to less than 1 percent of the $4.4 billion unfunded liability, a relative drop in the bucket.
One thing that proponents of Props. C and D agree on is that neither measure is perfect, and more will need to be done to put San Francisco’s fiscal house in order. Prop. C is a strong step that helps slow the hemorrhaging while additional solutions are worked out in a collaborative manner.