San Francisco's Pension Contribution Will Be Far Worse Than Reported
Who's right? None of us, it turns out. SF Weekly is almost right, but for the wrong reasons. The Ex and Chron, meanwhile, are wrong for the right reasons. Pension stuff is maddeningly complex, so we'll stop being coy and instead try to explain a desperately serious -- and expensive -- situation. The current sum the city is expecting to pay out for pensions in fiscal 2011-12 is actually $423 million. Here's how that pencils out.
The $375 million figure is actually an old tabulation for the amount San Francisco expects to pay into its employee retirement system (SFERS) for pensions. The current figure, per Leo Levenson, the director of the budget and analysis division in the controller's office, is $378.2 million.
(Following a deal with SEIU workers, by the way, that number is down from $62.7 million in 2010-11. Of course, the SEIU workers received pay raises to make up for those contributions, which will eventually come back to drain the pension fund. Whether the city gains or loses money is something we'll have to wait and see.).
But wait -- there's more. San Francisco also pays into the state retirement system (CalPers) for some of its employees. That payment is currently sized at $21.7 million -- though pre-payment can sometimes result in a rebate of several million from the state.
As is, however, the 2011-12 tally is sitting at the aforementioned $423 million. Of course, that number is not set in stone. Reductions in payroll would result in a commensurate reduction in pension costs. But, Levenson notes, that reduction could bounce back in future years if more money is needed to keep the pension fund solvent.
The takeaway? One more time: Remember that pension and benefits crisis SF Weekly wrote about? Turns out it wasn't a joke!
Coda: How did SF Weekly come up with the erroneous total of $433 million? By oversimplifying the very arcane matter of pension payments. The city's contribution rate was recently upped from the anticipated 17 percent of payroll to 18.1 percent. SF Weekly multiplied city payroll -- $2.39 billion -- by 18.1 percent, and, voila.
Close -- but not so simple. The total of $2.39 billion includes overtime pay and premium pay and other elements that are not part of the pensionable contribution. It also doesn't take into account the pickup for employees who don't contribute a cent to their pensions.