Dear All,
One of the great advantages about volunteering at LPSF OPH Booths is that we get to meet a lot of interesting folks that are out there trying to make things better, just as we are. Yesterday, at the Pride Festival, we met Shirley, who did yeoman's duty at the San Francisco Civil Grand Jury investigating The City's pension mess. Shirley provided us with the Grand Jury Report, which many media outlets have already published in the form of commentary or excerpts. Today, I have posted the press release issued by www.californiapensionreform.com (the website referenced on the Grand Jury Report) on our LPSF website. I have not endorsed or recommended any action or initiatives, merely posted the information so that readers can make up their own minds as to what action, if any, suits them best. Cut and pasted is the press release, and attached (for those of you who are motivated enough to peruse 74 pages, as I was!) is the actual Grand Jury Report.
Regards,
Marcy
On June 24, 2010, the Civil Grand
Jury made the press release below. The
role of the Civil Grand Jury is to investigate departments and agencies of The
City and make recommendations. However,
it is up to “We the People” to implement the recommendations at the ballot
box. We either ignore the storm warnings,
or we take action. If the latter, more
information can be obtained at the website referenced on the Grand Jury
Report: www.californiapensionreform.com
San
Francisco Civil Grand Jury warns of impending ‘pension tsunami’
PENSION TSUNAMI: The Billion-Dollar
Bubble
During recent periods of economic
prosperity our City officials, along with compassionate voters, created
relatively generous pensions for many City employees. With the recent downturn
in our economy and loss of millions in value from the City’s pension fund,
these rapidly increasing costs threaten to jeopardize the City’s financial
future. The Office of the Controller estimates that the funding of pension and
retiree health benefit costs for fiscal year 2010 is $413 million, which is
expected to rise to $1 billion in 2015, approximately a third of the City’s
current General Fund. The expected General Fund contribution, which is
approximately 61% of the total pension and retiree health benefits costs, will
increase annually by $60 million for the next five years. This shift in
resources may drastically impact funding to other basic services, affecting all
San Franciscans.
Pension Pie: The typical San Francisco public servant will receive a
modest pension after many years of service and the Grand Jury is grateful for
their dedication and hard work. However, we note that 24% of retired
firefighters, 12% of retired police officers, and 1% of miscellaneous
(non-safety) employees receive retirement benefits of over $100,000 a year. The
California Pension Reform website designates these as “the $100K Club,” and San
Francisco has more than 900 retirees in this category.
Forgotten Proposition H: In 2002, San Francisco voters passed Proposition H, a
charter amendment changing the formula for Police and Firefighter retirement
benefits and mandating that, should the City’s contribution rate to the pension
fund exceed 0%, the City and Safety employees’ representatives should “meet and
confer” on a “material pension cost-sharing arrangement.” The City’s
contribution rate has exceeded 0% since fiscal 2004-05, yet the Jury found no
evidence that the City and Safety employee bargaining agents established such a
cost-sharing arrangement. The Jury has recommended that the City Attorney seek
a court order requiring the SFERS Board to comply with the City Charter.
The Swap: Since 2002 the City has “picked up” the employees’ 7.5%
pension contributions for members of the Service Employee International Union
(SEIU) Local 1021 and other smaller collective bargaining units (at least 9,883
employees). In May 2010, the City and SEIU Local 1021 entered into an agreement
that employees pay their own 7.5% contributions, and, in return, that the City
increase the employees’ base wage by 6% or approximately $60 million, effective
July 1, 2010. This “swap” was described as “cost neutral” for budgetary
purposes. However, the City’s negotiation team apparently failed to consider that
the $60 million swap would significantly impact the City’s future pension
obligations.
Pension Spiking and Pyramiding: Pension Spiking is an end-of-career promotion or an
excessive raise to increase or “spike” workers’ final pensionable income during
the last year of employment, the base period for calculating the pension
amount. The Jury found that seventy-one Firefighter retirees received a 10% or
more increase in pensionable income in their final year before retirement —
approximately 68% of the total number of Firefighters who retired over the past
22 months. There were few instances of spiking among Police or other retirees
for that period. The Jury also found instances of pension-pyramiding among some
nursing supervisors, for example. These retirees have been allowed to hold two
concurrent jobs, resulting in dual pensions. The Jury recommends that the City
take steps to curb abuses from pension spiking and pension-pyramiding by
limiting the final pensionable income an employee can claim at retirement.
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