What is City Hall going to do about pensions in 2013?

sbeydeh's picture

Are they opening new contracts with the union?

Zaquex's picture

No Idea

Frankly, I have no idea. However, I have discovered that the recent Adachi measure is not the solution. What may seem like a good idea is actually terrible considering "80% of its cost savings comes from steep increases in health care costs for city employees with dependents." This would mean that health costs would rise up to $5,300 for an employee with one dependent. As for public workers who can't afford the high cost, the burden would shift to San Francisco's taxpayers.

This does not solve "bloated management bureaucracy" or any other problems.

$170 million has supposedly been dedicated to public city services, but none have been guaranteed. With higher costs, does anyone recognize residents will spend less and be forced to rely on commuters or tourists.

bobbyh's picture

Train wreck

The City's pension system is headed towards a full blown train wreck.  Our contribution to the pension system this year was $300 million.  We are expected to be paying more than $692 million by the year 2014.  With a current General Fund budget of $1.2 billion, our pension liability is already eating up a lot of the funds--which would have gone to public safety, schools, services etc.--but the expected growth is just plain scary. It is literally a situation that could shut the city down in a very short period of time.  

I'm not sure if Adachi's measure is the silver bullet, and I'm pretty sure its not, but I am curious about what others think are solutions to this impending financial disaster? Something needs to change drastically.

Zaquex's picture

Still Hope!

 

There is still hope if not in a current suit to keep Prop. B, filed by Public Defender Jeff Adachi, off the November ballot from a group of city-employee unions, then from common sense of the average voter! Unfortunately, common sense has been dissuaded from truth as 77,000 signatures have been gathered from the people of San Francisco to effectively put the measure on the ballot.

The suit was called "COURT ASKED TO REVIEW ADACHI’S DECEPTIVE EFFORTS TO MISLEAD VOTERS COURT FILING DOCUMENTS SHOW THAT ADACHI DEPLOYED A CLOAK OF DECEPTION TO CONCEAL, WITHHOLD AND MISREPRESENT CRITICAL INFORMATION FROM VOTERS IN ORDER TO MISLEAD THEM INTO SUPPORTING HIS ANTI-HEALTH CARE BALLOT MEASURES."

While Michael Moritz, the measures' biggest backer, held a fundraiser for Prop. B at his Pacific Heights home, unions instructed people with this invitation:

Mike Moritz, a billionaire speculator and the financier of the Adachi Charter Amendment designed to make health care unaffordable for City workers, is having a party for his rich friends at his mansion in the toney Pacific Heights neighborhood to raise money for the campaign.

Come and tell them it is not OK to take health care away from our families. Bring your kids

Steve's picture

Adachi

Pays not a dime toward his city pension. Wage concessions from Mr. Adachi: nope. Increases in his department's budget over the last 6 years: over 45% 

My union has voted to open our contract twice to make wage concessions. Our dept. budget has been slashed.

He refused to change his prop to soften it's effects on the city's lower paid employees. Health insurance costs will increase the same dollar amount for the head of a city department and for the the most junior clerk. We hear a lot about highly paid city employees but this is one of the most expensive cities in the world, add a couple of kids and an out of work family member and that's it... If the prop were only talking about the pension contributions I could back it...  

Phil Ting's picture

bduget reform

Why is budget reform always on the backs of people who can't afford?  Yes - let's balance the budget on backs of people's children.  I have heard that one before isn't that how we got Prop 13 and the biggest tax loophole in CA history.  Government can save money by being more efficient and accountable to the citizens.  Yes - we do need to take a look at our expenses.  The General Fund has grown by $1 billion over the five years from $ 2 billion to $3 billion.  We need to make sure there is shared sacrifice across the board - not just on people's children.  While that is a quick fix we are probably overlooking other solutions.  If you balance your household budget, you wouldn't say let's cut our children's expenses and leave everything on the table.  We need to put everything on the table and make some tough decisions - but we should do them together as a City.  Ballot box budgeting is often the trouble.  The MUNI measure on the ballot this year is amending a MUNI measure from two years ago.  So we can feel good about ourselves that we solved a problem when all we did was correct an error we, the voters, made two years ago.

SteveLawrence's picture

Amend the Charter to limit city employees and their pay?

There are too many City employees, and they are paid too much. Pension and health care obligations threaten to sink the City. Perhaps there should be a Charter amendment that a) limits the number of city employees to a certain resident to employee ratio, and limits the average compensation (including the value of benefits) to 110% of that for the average private employee in San Francisco. This would be a way to control politicians, who cannot say no to unions (and still survive politically).

gcotter's picture

Get rid of city pensions

Most major corporations got rid of defined benefit pensions ages ago.  Most converted to some type of defined contribution plan where the corporation makes a contribution to a 401K type plan and then it's up to the employee to manage the money.

But how to get from one to the other?  Good Question, and I know of at least one answer - there may be many more.

Back in 1984 Wells Fargo got rid of its pension plan.  Here's how:  It took the money in the plan, added more money from the bank's coffers, and bought every current and prior employee (who had been a member of the pension plan) an annuity through Met Life.  The dollar value of each annuity was based on age, years of service, salary, yadda, yadda, yadda.  Each employee and former employee  received a letter from Met Life stating what the monthly payout would be at age 55, 56, 57....65.  It also stated what the beneficiary would receive if the employee died.  Then, after all the old pension stuff was wrapped up, they started a 401K type plan (called Tax Advantage Plan or TAP) which still exists in some form today.  Like most plans of this type, the company makes a contribution and the employee may or may not contribute.

Why can't the City do something like this?  Get rid of all this future debt by spending whatever is in the kitty now to buy annuities for current and former city workers.    Provide 401K plans (or whatever they call them for public employees) and let the Union negotiate each year  for how much the City would contribute for that year instead of negotiating for what our children and grandchildren will be expected to pay in the future.

Defined Benefit pensions are a thing of the past in most companies these days.  Only civil service and some unions still hang onto them.  We've seen the future if we continue down the current path and it's ugly.  Really ugly.

Maybe converting existing pensions to annuities isn't the answer, but changing from defined benefits to defined contributions is something we need to consider.

.

SteveLawrence's picture

budget reform

I find no solution in the above by Phil Ting. Perhaps "shared sacrifice" is a constant percent off each department's budget? But that will not work for some expenses with fixed prices. "More efficient and accountable"--fine principle, but insufficient. "Put everything on table" and "do them together as a City"--come on, that is warm fuzzy talk, unhelpful. If Ballot Box budgeting is unwholesome, what is relying on the current political process where special interests nix each cut; should a politician buck the interests, bye-bye. So far I see no better idea than:  amend the Charter so that the number of public employees (our major expense) is limited (to say one for each thirty San Franciscans), and their compensation is limited (to say 110% of the median private employee's, median to median.) Isn't that what constitutions are for? setting limits? Certainly politicians won't. Otherwise, let the city go Vallejo; thereafter, things will change.

Paid for by Phil Ting for Assembly 2012. FPPC ID# 1343137