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Let It Bleed 

The city is awash in red ink, thanks to billion-dollar benefit giveaways and our politicians' lack of will.

Wednesday, Oct 20 2010

Page 3 of 5

City voters also approved changing final salaries from the average of workers' last three years to their salary during their last year on the job. For most employees, this was simply a small financial benefit. But for those who received fat promotions in their final years, it was a personal gold mine. According to a recent Civil Grand Jury report, 68 percent of firefighters in the past several years received a raise of 10 percent or more in their final year on the job. The Board of Supervisors' response to reports of institutionalized pension-spiking has been to pass resolutions forbidding pension-spiking, without defining what it is or admitting it ever occurs.

This law isn't just toothless — it doesn't even know what it's supposed to bite. Addressing the supes at a recent hearing, Deputy Fire Chief Monica Fields flatly told the Board of Supervisors, "Any increases on final pensionable compensation are legitimate ... increases in final pensionable income do not occur for purposes of increasing employees' pension compensation." End of discussion. And that was good enough for the board.

This pattern of behavior makes no sense if you assume that the purpose of San Francisco city government is to run San Francisco. But it makes perfect sense if you think of San Francisco as a vending machine for salary and benefits.

It's not a scheme, but it is a system. All the people responsible for making decisions about San Francisco's pensions are themselves receiving a city pension — so there are no truly independent actors.

The unions whose members gain from increased benefits are direct contributors to politicians tasked with making decisions about union members' benefits. The last eight measures augmenting pensions or health care were placed on the ballot by the Board of Supervisors — by an aggregate 79-4 vote.

The city's Health Services Board, which decides what medical plans San Francisco uses and how they're implemented, has seven members — a majority of whom are elected by city employees to represent city employees. Every step of the retirement process is controlled by people who have a vested interest in it — literally. Not only is the fox guarding the henhouse, the fox has opened up a KFC franchise.

In theory, politicians are supposed to act as a check on ballooning retirement costs — but in San Francisco, unions and politicians are like conjoined twins. That's why, on those rare occasions when someone does actually propose solutions to our retirement crisis, politicians and unions sabotage them together.

Take Proposition H, which voters enacted in 2002. The measure, which upped maximum police and fire pensions from 75 percent to 90 percent, was sold with the pledge that, should the city ever have to contribute to its pension plan again, public safety workers would "meet and confer" with the city and "cover all or part of the costs" of the vastly augmented new pensions. The public handily approved the measure with the understanding that it could do limited fiscal harm. Even the controller indicated that the retirement system's "large surplus" rendered the notion of the city paying cash to support the changes far-fetched.

D'oh. The city's pension holiday ended abruptly in 2004 — and a recent Civil Grand Jury report claims the city failed to enforce Prop. H, paying hundreds of millions of dollars that ought to have been picked up by public safety workers.

City officials claim they did nothing wrong. In 2003 — a year before the city had to contribute to the pension system — public safety employees agreed to pay some of their pension costs in order to stave off a budget shortfall. The city now claims this concession also satisfied the Prop. H cost-sharing requirement — which wasn't triggered until a year later. One pot of money was used to satisfy two wholly separate obligations in different years. The cops and firefighters' contribution was double-booked.

Voters, it seems, don't read the fine print before heading to the ballot booth. The City Attorney does — and his office pointed out that the Prop. H pledge of "cost-sharing" does not necessitate a "dollar-for-dollar" correlation, meaning any contribution from police and firefighters could theoretically satisfy the law. The language of the law allowed the public safety unions to enjoy a risk-free reward. Taxpayers are picking up costs incurred by Prop. H although they were assured they wouldn't have to.

But the most cynical manipulation of a real effort to address the city's nightmarish finances came via Prop. B of 2008. That measure finally curtailed the city's ruinous five-year vested health care policy. City employees hired after January 2009 must now work 20 years to enjoy lifetime health care. In the long run, this will save the city billions. Yet in the sausage factory of San Francisco legislation, the proposition also included hefty pension and Cost-of-Living Adjustment increases for city employees — not just for the future employees who would be subject to more modest health care stipulations, but the current workforce, already enjoying the city's generous health provisions. 

The effects of this switcheroo were staggering. While the proposition will ostensibly save San Francisco a bundle in the far future — when city employees from the Justin Bieber generation retire — in the near-term, it will cost the city billions. A 2008 actuarial report of the San Francisco Employee Retirement System revealed that the Cost-of-Living Adjustments alone increased the city's pension obligation by $750 million. In order to close a billion-dollar loophole, San Francisco saw fit to toss billions into a new loophole of its own creation.

About The Authors

Joe Eskenazi

Joe Eskenazi

Joe Eskenazi was born in San Francisco, raised in the Bay Area, and attended U.C. Berkeley. He never left. "Your humble narrator" was a staff writer and columnist for SF Weekly from 2007 to 2015. He resides in the Excelsior with his wife, 4.3 miles from his birthplace and 5,474 from hers.


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