Editor's Notes

Finding a pension-reform plan that will work in the long run


I'm a pension-reform advocate. I think the current system is not only bad public policy, but that it's not sustainable in the long run. But I'm not convinced that the plan proposed by Public Defender Jeff Adachi is good public policy, either — and I'm not convinced that it works in the long run.

Adachi wants to mandate that city employees pay between 9 percent and 10 percent of their salaries into the city pension fund. He also wants to make employees pay more for dependent health care. He points out that the changes would save the city around $170 million a year.

But what he's proposing is an across-the-board pay cut for city employees — on top of the cuts they've already taken in the past several budget cycles — and that's a dangerous thing to do in a recession.

Think about it. That $170 million is money that city workers won't be spending buying food, clothes, movie tickets, restaurant meals, or any of the thousands of other things that can help get the economy going again. It won't be a fair pay cut, either. The clerk who makes $40,000 a year will get a $4,000 cut, leaving him or her with just $36,000, while the senior manager who makes $150,000 a year will get hit with the same 10 percent cut, leaving him or her with $135,000 a year. In one case, it's the difference between making rent and not; in the other, it's cutting out some discretionary spending. Even the Internal Revenue Service doesn't operate on that principle.

There's a larger point here, too. I hear from Adachi, and from many others, that when the city is broke, when the pension system can't meet its obligations, then everyone has to give back. Everyone has to take a haircut. Everyone has to share the pain.

But as Robert Cruickshank pointed out on the Calitics blog recently, public employees, and poor people, and middle-class private sector workers, and people who need public services, and kids who go to public schools, and college students ... they've been giving back for years. The rich, the big corporations, the people and institutions that have fared so well under the Bush-era tax cuts ... they haven't given back a dime.

It's true that there's pension abuse, the vast majority of it in the management and public safety areas. There are cops who make too much money anyway, get pay bumps right before they retire, and walk away with 90 percent of their artificially inflated salaries — for life. I could see capping pensions for each pay grade, and I could see requiring people who make more than $100,000 a year to contribute more to their pension funds.

But I think it has to be done in combination with new revenue. It has to be done in combination with an acknowledgment that in this budget crisis, some parts of our city, some parts of our society, aren't hurting at all, and are refusing to help out with anyone else's pain. We simply are not sharing the burden equally. And until we can start to change that, I'm not so thrilled with blaming the middle-class city workers for the local budget problem.


The premise of the article is incorrect. Contributing to your pension is not a pay cut for the same reason a private employee contributing to her 401(k) is not getting a pay cut. The worker is contributing to his or her retirement account. What the article appears to be advocating is a subsidized retirement, which people in the private sector (and most in the public sector) don't receive.

Posted by Patrick on Jul. 07, 2010 @ 11:32 am

Thank you, Patrick. As a city worker, I already contribute 7.5% to MY OWN pension, and I have no problem upping that to 9%. The city had to put over $300,000,000 into the pension fund this year due to the downturn.

I keep hearing the left call Adachi's plan "anti-labor". This is laughable. Why is it "anti-labor" to be required to contribute to your OWN PENSION?

As for health care, it costs a fortune. Why should the rest of the taxpayers foot the bill for it all, or even most of it?

Government workers are not Imperial Mandarins. We have an obligation to take responsibility for part of our retirement and health care, as to workers in the private sector.

Actually, the days of pensions are swiftly vanishing. Soon, probably in a couple of years, SF is going to have to move to the 401-type plan for new hires, simply because pensions are no longer sustainable.

As for taxes: "tax the rich" as about as old and tired as it gets. Please move on.

Posted by guest on Jul. 07, 2010 @ 12:01 pm

Two good posts already. I think Mr. Redmond could possibly support the Adachi plan if we walked through his $40,000 employee example.

"It won't be a fair pay cut, either. The clerk who makes $40,000 a year will get a $4,000 cut, leaving him or her with just $36,000, while the senior manager who makes $150,000 a year will get hit with the same 10 percent cut, leaving him or her with $135,000 a year."

These examples are not factually accurate. Lets say this $40,000 clerk is one of the 9,883 SEIU employees who recently agreed to contribute 7.5% to his or her pension in exchange for the 6% pay raise swap. (Don't know if 7.5% already just kicked in July 1 or kicks in- in 2011). This "swap" btw reported as "cost neutral" for budget purposes actually cost taxpers $136,000,000 but that's a separate problem.)

This $40,000 clerk currently pays 7.5% and under Adachi plan would then pay 9% or a difference of 1.5% of $40,000 which is $600.00. Let's say the average dependent care premium for a City employee is $1,200 a month. Obviously, if you have no kids, Adachi plan has no impact- depends on the number of kids. So now instead of paying 25% of dependent care or $300 you know pay 50% or $600, an increase of $300. Lets throw in another $100 for increased dental and the total increase is $600 + $300 + $100 or $1000, $600 of which is going to fund your own pension. So for the $40,000 employee, the benefit cost sharing is $1000 where you stated above it is $4,000 - way off. You exaggerated the impact four-fold.

Your second example for the $150,000 employee is also incorrect but hopefully folks get the picture.....

Posted by Seej on Jul. 07, 2010 @ 1:10 pm

While I don't have a problem with contributing my fair share as a city worker, Jeff Adachi seems to think that city workers should be bled to death. Don't forget: city workers are also taxpayers and have made more than enough contributions to help the City of San Francisco during its many budget crises. City workers do pay into their retirement funds and will continue to do so under the terms of their contracts. Whereas I haven't seen Public Defender Adachi give back a dime to help the city. Where are his contributions as a department head? So far all I have seen is a refusal to help when that help is needed the most. Shame on Jeff Adachi! for deflecting the problems of Wall Street, greedy corporations, and his own greed, onto the backs of men and women who actually do the work and make the city run.

Posted by Guest Francesca Ripperts on Jul. 07, 2010 @ 2:27 pm

I am a City employee and want to say, we have given back already. We have agreed to pay 7.5% into our pensions, are paying an additional .95% additional premium to help other City employees who would otherwise have lost their jobs and/or have had a pay reduction, plus we are taking 12 unpaid furlough days, with a resulting pay reduction that will be taken out of our salaries each paycheck for two years. What more does Jeff Adachi want and why is he picking on us? Most of us do not earn more than $100,000, do not spike our pay and do not get paid overtime. The police and firemen/women are in that category, not the majority of City workers. I think public employees are also being scapegoated for the sins of corporate greed and entitlement. Maybe Jeff Adachi makes enough to contribute to a 401 K for his retirement and live off of it, but most of us do not.

I also want to say that we work under terrific pressure (in DPH, Children's Behavioral Health Services), pressure which has increased due to budgeting and staffing shortages. No one should have to work under this kind of pressure, because we cannot adequately provide low income and underserved populations the quality of services they deserve when we are turned into assembly line workers--spending more time doing paperwork on computers than actually working with our clients. If the City wanted to save money, they should have more carefully thought through their plans to put everything on computers. They should have more carefully evaluated the new assessment forms we have to fill out, which take hours. It takes many of us three times as long to complete paperwork than it did when we could just write out perfectly useful assessments, goals and other administrative details pertinent to serving children and families in mental health clinics. It is pathetic to see all our workers staring at computer screens when we should be seeing our clients. But if we spend too much time with clients we will then be in trouble for getting behind on the ever-speeding-up paperwork requirements on ever-more-time-consuming computerized software. It would be gratifying if SFBG could do an inside story on the costs vs. benefits of money spent on computer software programs that slow us down and take us away from our clients.

In conclusion, most City workers are conscientious, hard-working and, given the chance, could probably come up with myriad ways to reduce City spending without penalizing those of us who give our all to serve low-income clients. But nobody asks us. SFBG: You have an untapped source of information available to you if you can help us to disclose it to you without giving away our identities. After all, we don't want to end up unemployed for speaking out!

Posted by Guest on Jul. 07, 2010 @ 11:40 pm

You should be fined for not having insurance because if you have an emergency and go to the emergency room, then you do not have the money for the bill, it gets charged to everyone else. Get medical insurance for your entire family at the best price from http://bit.ly/cn4pjL By contributing to the pool and doing your part, overall costs come down. Its like stores that have to charge more because of all the theft. People go to the hospital and then not pay, it gets charged to everyone else.

Posted by kingbasil on Jul. 08, 2010 @ 2:34 am

I could almost support this...if the cops & firefighters were the first to take cuts, and were forced to live within city limits. Pick on the employees with 6-figure salaries first...before you start coming after people making $40,000 a year.

Posted by JWM on Jul. 08, 2010 @ 5:46 am

The show stopper here is that Adachi would charge $500/mo per dependent for health care in order to pay the attorneys in the PD's office much more than $100K to defend accused violent criminals.

If the crisis is as bad as Adachi says it is, if we couldn't wait for another year for a consensus solution, then we need to be making sure that Adachi's shop is sharing the pain, taking a haircut as well.

Given the lackluster performance of all of the legal shops in San Francisco, the City Attorney is essentially a cat toy in court, the District Attorney's shop is amateur hour along with the overpaid SFPD, and the PD is going off half cocked attacking lower middle income families in order to provide top flight legal defense to accused criminals, many repeat offenders, I think that a major legal haircut is in order for San Francisco's legal shops.

Those accused of a crime would still enjoy their constitutional guarantees to legal counsel if PD attorneys were paid $75K, not bad in this market, instead of $150K, and Adachi would have to deal with outraged and demoralized workers just like every other department where salaries average in the $50K range before these contributions and increases in health premiums would.

This is not my first choice of trade offs, but Jeff Adachi is asking for this kind of response given his attacks on law abiding working families, he is posing affordable health care for kids against providing rapists and murderers the best possible defense, a level of public service that we cannot afford.

Given the choice, voters will support helping city workers keep their kids healthy over providing the highest possible level of legal counsel to accused criminals when the constitution does not require that level of spending.


Posted by marcos on Jul. 08, 2010 @ 6:35 am

Hey Tim, you've gotta get your reporters to start taking advantage of Joe Lynn's petition gathering disclosure law to unwind who's financing Adachi's attacks on working San Francisco families:


In addition to venture capitalists and investors, Adachi has raised $10K from Governor Arnold Schwarzenegger's policy advisor, David Crane.

Disclosure requirements rock!


Posted by marcos on Jul. 08, 2010 @ 7:19 am

"Actually, the days of pensions are swiftly vanishing. Soon, probably in a couple of years, SF is going to have to move to the 401-type plan for new hires, simply because pensions are no longer sustainable. "

I see this comment often. Why are defined benefit pensions unsustainable now when Calpers has been able to sustain these benefits for over seventy years? And was funded over 100% less than ten years ago. And private pensions were more the norm.

Simple. Private companies wanted more profits and during the boom years convinced employees that defined contribution was good for them. Then the bottom fell out of their investments. Public employers deliberately underfunded public pensions for decades when times were generally better, and now cry that there is no money. Both systems skimmed off money for profits or in the case of government to spend on pet pork barrel projects.

No employee should not want their future security to be reduced to the lowest point possible so every one is equal and poor in their old age.

Posted by Guest on Jul. 08, 2010 @ 9:21 am

How can it be said that contributing 7.5% to your retirement in exchange for a 6% raise is a take back? How crazy. They keep the 7.5%, but just can't begin getting it until they retire (and it's a generous pension) and get 6% more in pay now. The healthcare provisions as far as I can tell just put the workers more in line with the private sector. Still better than a whole lot of workers have. The economy has changed also. We are not going to see any more booms to refresh city coffers like the old days. On the other hand, I could not agree more that we have very unfair taxation in general. Wealthy individuals and corporations are not paying their fair share by a long shot. Opponents of this measure have said nothing (factual) to convince me this is not fair, reasonable and needed. I am not easily moved by and am very skeptical of anything that smells of a scare tactic. I am convinced that we face some dire economic circumstances if this isn't dealt with now. We should address taxation inequalities and other problems such as high paid patronage job holdovers from the Willie Brown era going forward.

Posted by D6 Resident on Jul. 08, 2010 @ 10:16 pm

a shakedown? How else can one describe the (imposed) large payment increases into health and retirement? Theft, perhaps? Note the word "increase," which implies that payments have been ongoing, and so any increase in health/retirement payment means a corresponding decrease in income, ie a pay cut.

So Adachi would impose a pay cut on workers in a depressed economy, exploit peoples' genuine resentment against their own economic hardship, then say it's for everyone's own good? Oh but sacrifice and valor are required in these trying times, and our Public Defender is the man for the job.

Does anyone get the feeling something just doesn't add up?

Posted by Guest LD on Jul. 08, 2010 @ 10:42 pm

D6 Resident,

If I may quote:

"I am not easily moved by and am very skeptical of anything that smells of a scare tactic."

Fair enough. Me too, actually. Here's your next sentence:

"I am convinced that we face some dire economic circumstances if this isn't dealt with now."

Sounds like Adachi's trainwreck scare tactic escaped your skepticism.

FACT: The majority of city workers will be significantly hurt by this proposal.
FACT: Pensions eating up a large portion of the city budget by 2015 is at best a forecast.

Posted by Guest LD on Jul. 08, 2010 @ 11:12 pm

So given budget scarcity, do you think that San Francisco voters would want to price kids out of health care so that Adachi might provide the best possible criminal defense to the indigent because billionaires want Wall Street to get their hands on as much of working peoples' dwindling incomes as possible?

SEIU already negotiated pension contributions to be effective next year. Locking requirements that labor do what labor has already done into the charter during what is probably going to be a low point in the economy does not make sense.

For all of the times that moderates and conservatives have appealed to largely childless San Franciscans, browbeating us with "why are progressives so hostile to middle class families living here," this proves that they don't give a damn about kids.

Of course, if the Poverty Maintenance Organizations did not dominate the progressive movement, then progressive supervisors would have the latitude to appeal to the vast majority of progressive voters who do not receive social services by checking corruption in the budget process. That would free up many more resources than Adachi would, and would do so on the backs of highly paid often political appointees.

Part of this vulnerability is self inflicted.


Posted by marcos on Jul. 09, 2010 @ 7:48 am

Only an idiot thinks putting money away for your own retirement is a pay cut. By that logic if we all saved an extra 10% of our salary we would be cutting our own pay. Yes, it means you have less to spend at the movies but that is another matter. Maybe everyone should go to a defined contribution retirement plan and that way they will feel more ownership of their money.

Posted by Guest on Jul. 10, 2010 @ 1:22 pm