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San Francisco Pension Plans To See Major Overhaul

San Francisco Pension

Posted: 11/10/11 08:38 PM ET

By Jason Dearen, Associated Press

SAN FRANCISCO (AP) -- Resounding voter support this week for pension reform measures in San Francisco and Modesto offered some reassurance to leaders of other California cities also struggling to deal with ever-tightening budgets partly due to the costs of generous retirement plans for their employees.

More than two-thirds of San Francisco voters in Tuesday's election supported Proposition C, which would increase contributions by some city workers and raise the minimum retirement age for some others to save $1.3 billion over the next decade. San Francisco faces a $4 billion obligation over the next decade for tens of thousands of current and former employees under its system, which was created in better economic times.

In Modesto, voters supported three nonbinding advisory measures that asked voters there if they agreed that pensions for city workers should be reformed. Support for the measures, while not creating new city law, increased pressure on city leaders to enter into serious reform discussions.

"I think the results show strong public support for pension reform, and I think it's reassuring to those of us trying to make reforms in order to control skyrocketing costs of pensions," said Mayor Chuck Reed of San Jose, whose own negotiations with public employees' unions are at an impasse.

San Jose, the nation's 10th largest city, is planning to put a reform measure on the March ballot regardless of how negotiations result, Reed said.

Without pension reform, the city is facing closure of all branch libraries and community centers, as well as further cuts to police and firefighters. Even with higher revenue projections, San Jose is facing its 11th consecutive year of general fund deficits, and has a projected shortfall of $80.5 million in 2012-2013, largely due to retirement costs.

"We're going to have a reasonable proposal on the ballot in March, and we believe the people of San Jose will overwhelmingly support it," Reed said. "(People) are very aware we are draining money from services and pouring it into retirement costs."

In San Diego, officials have collected more than enough signatures to qualify an initiative to change the city's charter on pension calculations. If it qualifies, it would appear on the June ballot.

Pension reform is an issue in cities throughout California and at the state Capitol, where on Wednesday a group of Republican state lawmakers also urged Gov. Jerry Brown to convene a special legislative session on his pension reform proposal.

Brown unveiled his plans last month calling for increasing the retirement age to 67 for new, non-public safety employees and having local and state workers pay more toward their retirement and health care. It also would put new workers in a hybrid plan with a 401(k)-style vehicle.

Although the changes would not solve the state's unfunded pension and retiree health liabilities, a report released this week called it a bold starting point.

"The Senate Republican Caucus believes it is critically important to engage the entire Legislature on pension reform now," wrote Senate Republican leader Bob Dutton of Rancho Cucamonga in a letter to the Democratic governor.

Concessions by public employees will be needed to fix ongoing budget crises at all levels in California, and supporters of San Francisco's Proposition C described it as a way forward: a consensus measure endorsed by diametrically opposed groups -- business and labor unions. While critics charged that would not save enough, proponents said it's a good start.

Labor advocates said Tuesday's election result in San Francisco also shows that, politically, a measure will only succeed at the ballot box with union support. The second reform measure on the city's ballot, Proposition D, sought deeper concessions by police, fire and employees' unions, and did not fare well.

"Every poll I've seen, voters want reform but when you talk about robbing police and firefighters of retirement benefits it goes the other way," said Steve Maviglio, a spokesman for Californians for Retirement Security.

"If it's going to go on the ballot, it is going to need union support to be successful."

Still, the pension dilemma is not only centered in large cities or the state capitol. Modesto City Councilman and mayoral candidate Brad Hawn said the city has cut services like police and fire as much as is prudent, and will still face a $10-to-12 million deficit if retirement and compensation concessions are not agreed to by city workers.

He said the three ballot measures were reminders that there is public support for reform, and he hoped the vote would spark serious discussions with unions.

"Now that the election is over we need to start sitting down and see what we can do to share liability with the employees in a way that honors them as employees but also in a way that's sustainable for the city," Hawn said.

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Associated Press Writer Judy Lin in Sacramento contributed to this report.

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Filed by Carly Schwartz  |