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| How does this alter the city's financial outlook? |
Barring an unlikely reversal at a Wednesday meeting, the city's forthcoming pension contribution may swell by $60 million in the next fiscal year alone -- and the city's union workforce could also be made to contribute millions more than they'd anticipated.
At issue is whether the San Francisco Employee Retirement System will undo last month's vote to follow its actuary's advice. That advice was to lower the city's anticipated investment return rate from 7.75 percent to 7.5 percent. While this may sound insignificant, we're talking about 0.25 percent of a very large number indeed.
Here's what's at stake.
Pension plans are funded via three sources -- investment returns, city contributions, and worker contributions. The city has long assumed a 7.75 percent return when tabulating yearly how much money it will have to contribute. Last month, by a slim 3-2 majority, the city's retirement board voted to lower the assumption to 7.5 percent. To put things as simply as possible, when you're assuming a lower investment return, you're mandating a higher city contribution -- $60 million is the figure currently being bandied about in City Hall.
In the past, the city would have eaten this money on its own. But, thanks to "
The mayor's pension reform measure," Proposition C -- which voters passed overwhelmingly in November -- city workers could be forced to partake in this foul meal as well.
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