Sweet Melissa

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Constant Readers,

My dear friend Benjamin Wachs writes a column called "SFGov InAction" over at SF Weekly. It's a look at the Supes agenda for the coming week and commentary on the meetings. He's on vacation right now and asked me to fill in for him this week. Obviously, I jumped at the chance.

Other InAction fill-ins have been Greg Dewar, Paul Hogarth and Matt Baume, and I'm honored to be in such wonderful company.

Benjamin is brilliant, so I didn't try to copy him. But I did try to do the column justice.

Check it out here.

-Melissa

The Good, the Bad and the Ugly: San Francisco Retiree Health Care

This is the second in a series on San Francisco retirement benefits. Last week, “The Good” examined The City’s relatively well-funded pension system. Today, we look at “The Bad”: retiree health care for city employees.

"Any employee who adheres to the faith or teachings of any recognized religious sect … [that] depends for healing upon prayer” was allowed to opt out of The City’s health care system back in 1937, when it was first added to the City Charter.

Back then, the system was funded entirely by employee and retiree participants, with no contribution by taxpayers. Through the years, voters amended the Health Service System and now it bears little resemblance to the original plan. In the name of competing with other cities for talent, San Francisco took over more and more of the costs of the system. (Charter sec. 12.) In fiscal year 2008-09, health coverage for the average member cost $765 a month, with The City paying $641 of that amount, or 84 percent. (Download Retiree Health Graph.)

Because The City’s obligation to pay for retiree health care is right there in the charter, retirees have a vested right to lifetime coverage. (Note to Mom: “Vested” is a fancy legal term meaning “absolute,” or “The City would have to sell police cars to pay this obligation.”) All city employees hired before Jan. 10, 2009, have a vested right to lifetime retiree health benefits after only five years on the job. Thus, for each vested employee — active and retired — The City has a debt obligation. Add them all together (there are about 60,000 members not including dependents) and we have one big debt. How big? According to an actuarial study released in July 2006, the number is — hold onto your hats — $4.9 billion. (Study here in big pdf: Download Towers-PerrinGASB45Report.)[Also, for a more clear picture of the cost chart scroll to the bottom of the post on the Examiner website here.]

 The problem is, instead of setting money aside to pay the debt, San Francisco has been doing “pay as you go,” which is the equivalent of paying the minimum on a credit card. Each year, The City only pays the cost of covering current retirees. According to the Controller's office, for fiscal year 2009-10 that number is budgeted at almost $129 million.

This pay-go system worked fine until 2006, when the Government Accounting Standards Board issued a new rule requiring government financial reports to include retiree health care debt. This is a very, very big problem for our fair city. (GASB announcement here: Download GasbBrief.)

(Note: The private sector has had to report this data since 1990. Not surprisingly, between 1988 and 2005, the number of large companies offering retiree health care dropped from about 66 to 33 percent.) (See GASBBrief above.)

You know how a person with a bad credit score has to agree to obscene interest rates on a loan because the bank is scared it won’t be paid back? Well, municipal bonds are essentially loans to The City, and San Francisco’s credit score is largely based on financial reports. In other words, if we have dicey financial reports, we’ll have to pay more in high interest rates to bond buyers.

Because the new accounting rules just went into effect, credit agencies have given localities some leeway to come up with a long-term plan to deal with this debt, so we haven’t been punished yet. Our credit scores are still quite good, but recent reports express concern about this looming obligation.

In moderately good news, San Franciscans passed Proposition B in 2008, making it harder for new employees to qualify for retiree health care. That proposition also requires city employees to pay 2 percent of their salaries into a dedicated trust fund. The City has to contribute the equivalent of 1 percent of payroll to the trust. There’s about $3.6 million in there right now. Baby steps.

The reason I refer to city-funded retiree health benefits as “The Bad” is not because I am anti-health care, but because our city’s financial health is now jeopardized by this enormous liability. We still need to make changes (and that’s the subject of Part III in next week’s column) because, unfortunately, we can’t opt out and depend upon prayer to heal this problem.

Odds and Ends from Today's Examiner page

Quote of the meeting

“I think a lot of the citizens of the city of San Francisco are really, really disappointed that the mayor and the board cannot seem to meet together where the public can actually hear their different proposals [or] make decisions that are joint efforts of this council.” — Public commenter

“Amen.” — Board of Supervisors President David Chiu, in response

---

San Francisco’s pension fund by the numbers

Active employees: 29,919

Collecting benefits: 22,294

Total participants: 57,255

Fund in 2008: $583 million surplus

Fund in 2009: $494 million deficit

Averages, as of July 1

Police

Age at Retirement: 52

Current Age: 70

Annual Pension: $62,701

Fire

Age at Retirement: 54

Current Age: 70

Annual Pension: $72,505

Miscellaneous

Age at Retirement: 59

Current Age: 71

Annual Pension: $26,073

[These numbers are from this actuarial repor in pdf: Download SFERS 2009 Report.]

Firefighters in the hot seat again

Supervisor Chris Daly’s “zero tolerance for intoxicated firefighters” amendment died in the committee last week because it lacked the support of supervisors Eric Mar and David Campos.

Perhaps the best part of that committee hearing was watching Fire Department Chief Joanne Hayes-White try to politely say: If you put this on the ballot, firefighters will come out in full force to vote down this and all the rest of your stupid initiatives.

We’ll see whether she repeats that threat at today’s hearing, when two more charter amendments aimed at firefighters are considered.

Currently, the City Charter says firefighters may not work more than 48.7 hours per week. (Sec. A8.452.) Supervisor John Avalos has proposed an amendment mandating that firefighters work no less than 52 hours a week. The controller’s legislative report says firefighters in places like Oakland and Los Angeles have 56-hour workweeks. That same report estimates that Avalos’ measure would save the city $7 million this year, though it doesn’t say how. [Link to pdf of proposal and report here.]

The other amendment being heard today is a proposal from Supervisor Sean Elsbernd that would make a number of changes to The City’s pension system, including an increase in the percentage of salary that police and firefighters have to pay into the pension fund from 7.5 to 9 percent. According to Elsbernd, 9 percent is the industry standard for public safety employees. [Link to pdf of proposal here.]

Whether either of these amendments make it on the June 8 ballot is anyone’s guess. One thing, however, is certain: City Hall is the safest place in town today.

The Good, the Bad and the Ugly: San Francisco Retirement

This is Part I of a three-part series on San Francisco retirement benefits. In the first installment, we will examine “The Good”: the San Francisco Employees’ Retirement System.

By “good” I certainly don’t mean “perfect” or even “un-scary,” but I do mean that our system is the envy of other localities. And compared to our retiree health benefits fund (the subject of Part II) the city pension fund is positively fat and happy. Some background:

* SFERS provides a “defined benefit,” meaning that when a city employee with at least 10 years of service retires, he or she is guaranteed a certain amount of money each month for life. The amount is based on age at retirement, length of service and final compensation from The City.

*Participants contribute 7.5 percent of their wages to SFERS. The fund itself also (ideally) makes money on investments. To the extent that these two sources aren’t enough to meet plan obligations, the San Francisco general fund must fill that gap.

* For fiscal year 2010-11, The City’s obligation is about $325 million. By 2013, that number is projected to be more than $600 million. (Now would be a good time to breathe into a brown paper bag.)

* Schadenfreude is cold comfort...but in case you’re interested, San Diego’s pension fund is $2.1 billion short of its obligations and Los Angeles needs $4.6 billion to be fully funded.

Earlier this month, former SFERS Executive Director Clare Murphy graciously agreed to talk to me about the state of San Francisco’s pension fund. Here’s what she had to say:

How are we doing?

We are vigilant as ever with regard to managing the trust’s assets of some $13.5 billion. Despite some recent losses, our pension plan is strongly funded.

Why are we in better shape than other cities?

There are two primary reasons for the strength of our fund. First, in San Francisco, changes to retirement benefits have to be approved by voters. Any proposed increase is made very public, and the financial impact is calculated for all to see. Because voters have a long view of city finances, few such proposals are passed. This keeps fund obligations at a moderate level. San Diego and Orange County are looking to copy our system.

Second, the retirement board — which oversees the fund — is made up of well-qualified and focused trustees who are committed to thoughtful and responsible investment.

Still, things look pretty grim. How scared should we be?

Pension funds have long tails. You can’t isolate this year or even this decade and say, “The sky is falling.” When we look at the fund, we have to project 40 to 80 years in the future; there are going to be some volatile years. Last year, the employer contribution was the equivalent of 9.5 percent of the total city payroll. This year, it will be 13.5 percent. But back in the ’80s, there were times when it was more than 100 percent for safety personnel and almost 20 percent for miscellaneous employees. The fund was established in 1889. It survived the Great Depression and it’ll survive the current crisis.

After 24 years as executive director of SFERS, you’re retiring and only have two days left on the job. Can I get you to say something dicey about your time here? Got any gossip? A list of people you hate?

(Laughs.) I still have a continuing responsibility to the people of The City and county of San Francisco.

Eh, it was worth a shot.

Information for this post is from a recently-released actuarial report, which is attached here as a huge pdf. Download SFERS 2009 Report

OMG!: Rules Committee

Constant Readers,

I'm watching the replay of today's Rules Committee. Chris Daly just compared Gavin Newsom to Caligula.

Seriously.

Context: Daly said he (Daly) had heard that Mistermayor was trying to put pressure on certain members of the Small Business Commission regarding leadership of the commission. 

Caligula supposedly believed himself to be a god, and feuded with the Senate. And was a murderous sociopath. Soooooo....there's that.

-Melissa

Um, I'd like to Request a Stop: Ending automatic pay for Muni operators

Those of you who rode Muni two weeks ago may have noticed fliers distributed by the Transit Workers Union Local 250-A, which represents operators. In the handouts, the union took issue with Supervisor Sean Elsbernd’s proposed City Charter amendment that would eliminate the guaranteed wages and benefits of Muni operators. Instead, operators would have to bargain for their compensation. (PDF here: Download Muni Charter Amendment.)

The Rules Committee will consider Elsbernd’s proposal today. I, for one, am hoping that the committee and full Board of Supervisors approve the measure so we can endorse it on June’s ballot. Here’s why:

Since 2007, Muni operators’ wages have been based on this calculation: Look at all the comparable transit systems in the nation (in cities with populations of more than 500,000 that employ more than 400 operators) and pick the two that pay the highest wages, average those two wages, and that’s the least our operators can be paid. Presently, that’s about $29 per hour.

This little arrangement was supposed to avoid strikes. However, in 1976, voters enacted a law that basically prohibits public employees from striking, making the wage provision unnecessary.

As for benefits, the reason more than 60 percent of operators received checks for $3,000 at the end of last year is based on this calculation: Examine those same two high-paying transit systems and calculate the average value of their benefits (let’s say $20); take that figure and subtract the total amount we pay operators in benefits (let’s say $14); and the difference is the amount The City has to put in a pot for operators. In our hypothetical, it’s $6. (Charter Sec. A8.428.)

But it was $6 million in 2009.

At the end of each year, that pot of money is divided up among operators based on the number of hours worked. This year, regular full-time employees netted about $3,000 each.

In the flier that was distributed, the union argued that the $3,000 is not a “bonus” but a payment to make up for the fact that operators with dependents don’t get the same amount of health care benefits as other city employees with dependents. But the pot of money isn’t limited to employees who claim dependents. Even a single operator with fully paid health insurance and no dependents was given $3,000 if they worked enough hours, so the union’s rationale doesn’t fly.

In fact, the charter was amended to allow the “pot of benefits money” for operators in the November 1967 election. According to that voter guide, The City needed to beef up operator benefits because we were having a hard time retaining and recruiting operators. But in this economy, I’m sure there are plenty of people who would view simply having a job as a “bonus.”

To recap: Muni operators enjoy an automatic wage calculation and they get a benefits payout that was created to attract applicants when people are presently desperate for work.

As the public braces for yet another round of Muni fare hikes, meter increases and service cuts, it will take a lot more than a flier to explain why operators’ salaries and benefits should not be negotiable.

Call me, Sarah! I got the scoop on Death Teams!

Did you know that California law allows counties to create Elder Death Review Teams? It does — and San Francisco has one!

The teams — comprising law enforcement officials and caregiving professionals — help identify and review suspicious deaths of elderly people. Assemblyman Tom Ammiano, D-San Francisco, has introduced legislation (AB 535) requiring nursing homes to report deaths to the teams and making it easier for the teams to obtain death-related documents and information from nursing facilities.

I’m guessing this will end up on the Fox News ticker as “California Elder Death Review Teams to Get Information From Nursing Homes.”

Daly's Firefighter Amendment to be Heard Today

At today’s Rules Committee meeting, supervisors Eric Mar and David Campos (and Michela Alioto-Pier, if she’s feeling well enough after having surgery) will hear Supervisor Chris Daly’s proposal to amend the City Charter to include a provision demanding termination of any firefighter found to be under the influence of alcohol while on duty. (PDF here: Download Firefighters Ordinance.)

Assuming progressives support the measure (and I suspect they will), this proposal will be on the ballot in June.

In 2004, the civil grand jury blasted the Fire Department for not doing enough to stop firefighters from drinking while on duty. (PDF here: Download June 2004 Civil Grand Jury.) Then in March 2005, 28 firefighters brought a lawsuit against the department demanding an end to “open and notorious” alcohol abuse among their ranks. About a month later, a battalion chief was found to be drunk while on duty. The lawsuit was later dismissed and the chief was fired, but it still looked like some fire stations were Stoppa Phi Rho frat houses filled with highly compensated beer-pong players.

In September 2005, the department began a drug and alcohol testing program that allows random screening (the prior policy did not). By March 2008, only two employees had tested positive for prohibited substances, and each was suspended 90 days and ordered into a yearlong substance abuse program that included regular screening.

This is both promising news and the genesis of the problem that Daly’s amendment seeks to address: Should a firefighter who is found to be under the influence of alcohol while on duty eventually be allowed to return to work, or should a legitimate positive test for alcohol result in automatic termination?

Of course, this would have been a much more pressing question back in 2005. In light of the fact that so few firefighters have tested positive for intoxication since the new testing policy has been in place, I asked Daly, “Why now?”

His response: “The only political upside to this is that it’s good public policy. Of course, that and $70 probably won’t be getting you a Fast Pass for much longer. Now I’m in my last year, and I’ll probably never run for anything again so there’s little political downside for me — other than having to listen to aging jocks yelling at me that I’m worse than [Dick] Cheney.”

Damn you, Cell Phones!

A few weeks ago, we learned Mistermayor will endorse a plan to require radiation levels to be listed next to cell phone prices at stores. In reading about this problem, I learned that one way to avoid the supposedly harmful effects of cell phone radiation is to keep the device away from you (read: text, don’t call) so part of me is glad to have a “real” reason to avoid human interaction.

But at Tuesday’s Board of Supervisors meeting, The City’s war on radio frequency energy went to a new level.

First, Supervisor David Campos introduced a resolution urging “the federal Environmental Protection Agency to study the health impacts of wireless facilities and if appropriate to establish a safe level of exposure to radio frequency radiation emissions.” According to Campos, “There remains considerable debate and a degree of uncertainty within the scientific community as to possible health effects to people, especially children, from exposure to extremely low frequency electromagnetic and radio frequency radiation.”

Campos also is a co-sponsor of legislation proposed by Supervisor John Avalos on Tuesday that would “create new aesthetic standards for cell phone antennas.” The reason for the new rules is a “concern about proliferation of unsightly, ungainly cell phone antennas placed on our telephone poles.” Apparently, a working group that involves the Department of Public Works and the Planning Department has been drafting new guidelines and we can expect hearings on the proposed rules in the coming weeks.

To sum up City Hall and cell phone radiation:

They do not like it in our phones.

They do not like it near our homes.

They think antennas should look pretty.

These are the problems of our city.