Controller Confirms Amendment to Pension 'Reform' Plan Would *Cost* City Millions
|San Francisco finds innovative new ways to lose money...|
We couldn't help but notice, however, that an amendment Supervisor Eric Mar last week attempted to attach to Elsbernd's bill at the behest of the SEIU would ostensibly cost the city more money in both the short- and long-term -- hardly the ideal outcome for a pension "reform" measure.
While Mar claimed his amendment wouldn't cost the city money, Elsbernd vociferously disagreed -- and now the city controller's office has weighed in, too. They agree with Elsbernd.
"Our report isn't out yet, we're waiting for the actuary. But I'm quite confident [Supervisor Mar's] amendment is going to cost the city money," said Deputy City Controller Monique Zmuda. Without the report being finalized -- which it ought to be by next week's full Board of Supervisors meeting -- Zmuda was hesitant to even ballpark how much money the city would be losing. But she did note it was "millions, definitely millions. It's definitely going to cost money." Eslbernd said it could cost the city an additional $10 million a year.
Here's how Mar's amendment would ostensibly "reform" the city's troubled pension system by making it cost even more -- as we wrote earlier:
Members of the SEIU currently do not pay the 7.5 percent contribution to their pensions as do nearly all other unionized city workers; the city has agreed to make the payments in lieu of giving SEIU workers raises. Now, however, the SEIU is pushing for a 7 percent pay raise in return for its workers making the 7.5 percent annual pension contribution. ...You can count Zmuda among those who think this is an odd way to "reform" a pension system. "I don't know that anyone's intention when introducing 'pension reform measures' is to actually cost the city more money," she says. "Generally, you look at saving the city money."
Elsbernd, however, points out this is not a cost-neutral proposition for the city. In fact, he claims, preliminary estimates peg this as a $10 million annual cost increase for San Francisco -- truly redefining the term "pension reform."
The Westside supervisor notes that the SEIU plan would cost the city more money in two ways. First of all, if workers are earning higher salaries -- which they would be via a 7 percent raise -- then they'll eventually be eligible for higher pensions, which last until their dying days.
Secondly, the money the city currently pays into the SEIU workers' pension fund is not taxed. But money paid to SEIU workers' salaries would be. ... To use a simple, non-mathematical analogy, pension reform that actually costs the city more is like gaining weight on a diet.