Awaiting consensus

The long-anticipated compromise pension reform plan still has a couple of key critics

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Mayor Ed Lee's pension reform proposal was unveiled May 24 with support from some of those who helped develop it, including investment banker Warren Hellman, Rebecca Rhine from the Municipal Executives Association, San Francisco Chamber of Commerce head Steve Falk, and San Francisco Labor Council Executive Director Tim Paulson.

The plan would dramatically alter the way the city manages employee retirement benefits, starting July 2012, while exempting employees who earn less than $50,000. Lee described it as "serious," "comprehensive," and a plan that "reflects consensus."

Already the legislation to place it on the fall ballot has secured the cosponsorship of Board President David Chiu and Sup. John Avalos, rival candidates for mayor. Other mayoral candidates also offered their support, including former Sup. Bevan Dufty and City Attorney Dennis Herrera.

But there is one notable exception to the support for this plan, a party that has been at the negotiating table where it was crafted: Service Employees International Union Local 1021, which represents about half of the city's 26,000 employees. The union claims the plan disproportionately affects 500 SEIU members, who are mostly women and people of color and already took large pay cuts last year to avoid layoffs.

Avalos, who described Lee's proposal as "a sensible approach" and "the right way to go," has said that if SEIU's concerns aren't adequately addressed, he'll withdraw his sponsorship.

"I'd like to get to a consensus, but if we don't and 10,000 union workers don't sign on, I'm going to take my name off as a sponsor," Avalos said. "We have to find ways to pay for pension benefits without decimating jobs and social services."

Lee's measure also didn't win over Public Defender Jeff Adachi, who claims the proposal won't make deep enough or fast enough cost savings in the next few years, so he will continue gathering signatures to place a rival measure on the ballot.

So rather than the consensus product Lee hoped the whole city family would be able to convince voters to support, it's looking like pension reform could again be a divisive issue and one that spills over into this year's mayor's race.

Chiu thanked "our brothers and sisters from the labor community" when Lee announced his pension measure, noting that "each city worker that makes more than $50,000 would have to give thousands every year." He supports the pension deal and hopes SEIU will eventually back it. Avalos and Sen. Leland Yee, another mayoral candidate, seem to be waiting for SEIU to sign on before offering their full support.

Mayoral spokesperson Christine Falvey told us that Lee views SEIU's concerns as separate from the pension reform proposal. "He appreciates SEIU's input in the pension reform talks and has committed to sitting down with them and trying to resolve this issue."

Then there's Adachi, who helped qualify Measure B, a 2010 pension reform proposal that united labor and city leaders in opposition. He continues to gather signatures to qualify a competing pension measure, needing about 50,000 signatures by early July unless Lee amends his plan to secure greater cost savings in less time.

"My focus is on this issue," Adachi said, praising Lee's efforts at achieving consensus. "But is this going to solve this problem so we don't have to come back within two to three years? It comes down to a math problem."

Adachi says Lee's plan doesn't adequately address the city's need to save money now.

"The stress period is really in the next four years, so my hope is that the mayor's proposal could be strengthened," Adachi said, noting that his proposal yields $90 to $144 million in annual savings, compared to $60 to $90 million annually under Lee's plan.

Comments

The Mayor's plan doesn't go far enough. On Bay Citizen, both Mayor Lee and Warren Hellman claimed that $300 million or more savings per year was necessary. Now they put up a measure that saves $60 million a year and claim it's a solid measure? I'd stick with the Adachi plan.

I usually appreciate Elsbernd for being a watchdog over the City's finances, but he's dropping the ball here. His legal argument seems to be that both the Mayor plan and the Adachi plan may affect vested rights, but the Mayor's plan sort of affects them less. His reasoning is weak. In the union's lawsuit over Prop B last year, the court acknowledged that the solvency of the system can be a material factor in whether vested rights can be affected -- it doesn't do any good to preserve benefits when those benefits crater the pension fund and there's no money left for anyone.

Adachi's plan saves more money. And it's more equitable for lower paid workers.

Posted by The Commish on May. 31, 2011 @ 8:29 pm

You omitted this critical fact, Lee's absurd $195,000 pension cap, in the chart provided.

Adachi's plan is superior and Elsbernd (Lee) is out to lunch:

(1) Adachi's plan generates far more savings and therefore, avoids more layoffs and more cuts to critical City services. How can Lee even claim this is enough when at the same time, claiming we need a bond to repair potholes?

(2) Adachi is right - SEIU employees need to stop subsidizing the very generous pensions of police and fire. If any reporter would bother to read the City Charter, police and fire were legally required to increase their pension contributions a long time ago.

3) Elsbernd is making stuff up about the "legal roll of the dice." The "commensurate benefit" employees receive is the solvency of their own pension system. Otherwise, all employees are at risk of losing some portion (or all) of their pension because it is currently between $2.5 billion and $6.5 underfunded. San Jose is taking more drastic action right now than Adachi is. A huge flaw in Lee's proposal is that reducing employee contributions in "boom years" is EXACTLY the type of thinking that got us into this mess in the first place.

4) Lee's plan is not the "Business Plan." If one researched, you would see that the Chamber of Commerce receives funding from the City and therefore has a clear conflict or ulterior motive to support Lee's plan. A real survey of businesses would reveal they would support Adachi paln as it generates more savings to preserve critical CIty services.

5) Adachi caps pensions at $140,000- Lee\Elsbernd at $195,000.

6) Adachi's plan is more equitable for lower paid workers.

As has been posted, Lee originally said in February his goal was $300 million in annual savings. He failed and is now touting his "serious" proposal. Lee didn't move the goal posts, he took them down.

...This is BY FAR the best reporting on the pension issue by SFBG. I hope we can continue to see solid reporting on this important topic.

Posted by Guest on May. 31, 2011 @ 9:31 pm

I also agree with the last two sentences. This was a good article.

Posted by The Commish on May. 31, 2011 @ 9:47 pm

So, Supervisor Campos,

You are "intrigued" by the Mayor's plan? Like a rat looking up at a weaving cobra I'd guess. Hey, a guy's gotta pay is mortgage right?

Adachi's plan is more fair to all. As Joe O'Donoghue is wont to say: "Figures don't lie, but liars can figure.". The Hellman group are liars 'figuring'.

If Adachi or Gonzalez or both don't enter the race for Mayor because of this bullshit then they have holes in their heads. San Francisco needs a Mayor who'll tell them the truth and the remedies, not just someone looking to kiss Gabriel Haaland's upturned patooie at every opportunity.

Giants playing in my hometown (St. Louis) and every win is a loss and every loss is a win on both sides. Kind of like true love.

h.

Posted by Guest h. brown on May. 31, 2011 @ 9:43 pm

"Avalos, who described Lee's proposal as "a sensible approach" and "the right way to go," has said that if SEIU's concerns aren't adequately addressed, he'll withdraw his sponsorship."

Why is the city paying Avalos's salary?

Shouldn't the SEIU being paying it?

It's comical that the Bay Guardian thinks it is some sort of modern day muckraker when they line up behind these owned lackeys.

Posted by matlock on May. 31, 2011 @ 9:58 pm

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