When discussing the city's pension morass, the preferred analogy is a bursting dam. Fair enough. But, today, we'll use different too-much-water nomenclature: In pension world, when it rains, it pours.
Hot on the heels of city controller Ben Rosenfield's analysis of what would -- and would not -- save San Francisco money on runaway pensions, former Assemblyman Joe Nation has penned a scorching assessment of the city's retirement system at the behest of pension crusader Jeff Adachi and his group (bankrolled by Adachi patron Michael Moritz).
You can read the entire report here.
If ever you wanted to drown in dire fiscal assessments, this is your golden opportunity. Here's the kernel of Nation's dour analysis:
- Even if the San Francisco Employee Retirement System earns the healthy 7.75 percent return it bases its actuarial predictions on, it only has a one-in-three chance of meeting its future pension payment obligations;
- In fact, per Nation, SFERS would need to earn 11.5 percent returns for the next 18 years -- just to have a 67 percent chance of meeting those obligations;
- Contributions to the city's retirement system are currently equivalent to 16 percent of city payroll. "Based on contribution rates by the city's actuary, the combined share will reach 42 percent in 2015 and 45 percent in 2020." Naturally, since city expenditures are finite, this will lead to crippling budget shortages.
A handful of partial solutions are suggested -- all of which boil down to employees receiving less, paying more, or both.
Meanwhile, Rosenfield analyzed some of the ideas being bandied about by the Warren Hellman-led "meet and confer" pension reform group. Not surprisingly, the only way to save money now is to ask for money from today's employees -- not to simply impose fiscally sane conditions upon future hires.
The big savers per Rosenfield: Eliminating mandatory supplemental Cost of Living Adjustments
that reward retirees when the pension fund does well (even if it did horribly in the very recent past); and make current employees contribute up to five percent more of their paychecks. This year, that mandatory supplemental COLA surge paid retirees $170 million.
Ideas like capping pensions or doing away with other goodies, since they would only be applied to new hires, won't help in the near term.
Another day another dollar -- amortized and sucked away from current programs. C'est la vie
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