Will City Manage to *Lose* Money on Pension 'Reform'?
|It's like gaining weight on a diet...|
We've written a bit about Supervisor Sean Elsbernd and his proposed charter amendment to save the city money by rejiggering the pension system. He assessed his chances of getting the amendment out of Rules Committee today intact at "100-to-1" due to labor's objections. But he was wrong -- sort of. The measure was passed on to the full board untouched -- but so was a version with two amendments added by Supervisor Eric Mar that Eslbernd claims would actually cost the city millions.*
Here's the nitty-gritty: 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. "We want what every other public sector bargaining unit got," says SEIU organizer Robert Haaland, who said he's not sure "how the math will work out" regarding this plan.
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. Elsbernd said the Department of Human Resources is crunching the numbers as we speak -- but the ballpark price tag for the SEIU's proposition he's heard is the aforementioned $10 million annually. To use a simple, non-mathematical analogy, pension reform that actually costs the city more is like gaining weight on a diet.
"I'm frustrated," said the supervisor.
The SEIU also hopes to modify a plank of Elsbernd's plan sold as a means of staving off "pension spiking" -- when an employee earns a wage disproportionate to his or her lifetime salary in the final year of the job, thus triggering an artificially high pension. Currently, workers earn a percentage of their highest salary measured over a 12-month period. Elsbernd wants 36 months. The SEIU is pushing for 24 months. Haaland points out -- rightfully -- that pension-spiking is not really an SEIU issue.
Supervisor Eric Mar had proposed both of the "pro-labor" positions as amendments at today's meeting. He disagreed with Elsbernd that his amendment would cost the city money.
In other news, Elsbernd also yanked his proposed charter amendment that would have done away with Muni drivers' charter-enshrined right to earn the second-highest wage in the nation. He says he did this for three reasons: A. He was going to lose; B. The Transit Workers Union has come forward with cost-saving plans, but this charter amendment jeopardized their willingness to do so, and; C. While Elsbernd's plan wouldn't have started to reap any savings until 2011, the TWU's plan -- which we have not read -- may help immediately.
*Our original version of this story didn't note that two measures are going to the full board, not one.