Mainline - San Francisco Firefighters Local 798

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Progressive Pension Reform San Francisco Bay Guardian
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...it’s worth understanding where this so-called crisis
originated and how to fashion a progressive approach
to the issue.
Under Mayors Willie Brown and Gavin
Newsom, the city used its flush pension
fund as a way to avoid tough decisions on
employee pay
EDITORIAL It’s entirely possible that San
Francisco voters will see three different
pension proposals on the November
ballot. Public Defender Jeff Adachi, who
failed to pass a harsh pension-reform
plan last year, is determined to try again.
A working group headed by investment
banker Warren Hellman is working on
a plan, and Sup. Sean Elsbernd expects
some version of that to move forward.
And organized labor may do its own initiative.
But before any of those efforts are finalized,
it’s worth understanding where this
so-called crisis originated — and how to
fashion a progressive approach to the issue.
The idea behind San Francisco’s fixedbenefit
system is simple. Every year, the
city and it’s employees contribute to a
pension fund, which is invested under
strict rules, and when an employee retires,
he or she gets paid a predetermined
amount out of that fund. Until the financial
system imploded and the stock market
crashed in 2008, San Francisco’s pension
fund was solid. The reserves more
than covered expected payouts. In fact,
the fund was so healthy, and growing so
fast, that some years the city didn’t have
to contribute anything at all.
Under Mayors Willie Brown and Gavin
Newsom, the city used its flush pension
fund as a way to avoid tough decisions on
employee pay. Instead of giving raises, for
example, the city offered to pick up the
contributions some workers were making
to the fund (which would cost the city
nothing as long as the stock market kept
booming).
Now things aren’t so rosy, and the city’s
having to put hundreds of millions a year
into the fund to keep it solvent. For the
record, that’s not the fault of the city employees
who negotiated their contracts
in good faith — and who weren’t players
in the Wall Street greed and corruption
that wrecked the economy. In fact, if the
city had continued paying into the fund in
good times, the costs would be far lower
now.
The various pension proposals look at
a wide range of approaches, but in essence,
both Adachi and Hellman’s group
are going to ask city employees to put
more of their paychecks into the pension
fund. That’s the equivalent of a pay cut
— they’ll be taking home less money for
the same benefits they currently receive.
It’s true that city employees now get better
pensions than most private-sector
workers (a result in part of the fact that
corporate American, aided by Congress,
shifted most retirement plans to the
401(k) model, which puts all the risk on
the employees and leaves employers
largely off the hook). And there’s some
horrendous abuse, particularly by senior
police and fire staffers (former Police
Chief Heather Fong is getting $229,000 a
year for life, which is ridiculous).
It’s also true that the average midlevel
city worker gets a pension between
$20,000 and $24,000 a year.
Labor has already given back some $500
million in concessions over the past four
years (and most of that money has come
from lower and midlevel workers) City
programs and services have been cut, by
most estimates, by close to $1 billion.
The city has raised only $90 million in
new taxes.
The bottom line is that over the past
four years, the rich and big corporations,
which are radically undertaxed in our society,
have given back almost nothing to
the city, have felt almost no pain. Unless
pension reform takes that into account, it
won’t be fair or acceptable.
The first element of any new pension plan
should be progressive in scale: capping
pensions at, say, $100,000 (or lower);
eliminating pension spiking; and requiring
high-paid employees to contribute a
higher percentage to the fund than lowpaid
workers would make sense. Policy
makers should treat this as what it is, a
pay cut — and any cuts should fall disproportionately
on those who are more able
to afford it. Requiring the city to put its
share into the fund every year, even if the
market is booming, would help ease the
pain in bad years.
But there should be no pension reform
without tax reform. If San Francisco is
going to ask its employees to do more
to balance the local budget — and that
probably has to happen — then city officials
should be willing to ask the richest
residents and businesses to share the
pain too.
34 Main Line www.sffdlocal798.org