San Francisco Pension Reform, Proposition B (November 2010)
The Adachi Initiative would require police, firefighters and other city employees covered by CalPERS to contribute 10% of their pension contribution. These employees currently contribute either 7.5% or 9%, depending on when they were hired. The maximum amount that could come out of an individual worker's paycheck toward his or her pension contribution would be 2.5%.
Other city employees, who currently contribute 7.5%, would contribute 9%. Muni workers, who currently contribute nothing, would have to start paying into the system as other city workers do, under the Adachi proposal. The initiative would also require city employees to pay for 50%, rather than 25%, of their family's health care coverage.
Jeff Adachi, San Francisco's elected public defender, is the leading force behind the ballot initiative. He says that the measure, if enacted by voters, will save the city $167 million per year. Adachi says he is motivated to support the measure because "There's a fiscal train wreck just around the corner, as these pension costs are flying through the roof." Adachi also says that the way the current pension system is designed, ""It's like going to Vegas with your brother-in-law's paycheck."
On August 10, several public employee unions filed a lawsuit in San Francisco Superior Court to try to remove Proposition B from the November ballot.
Pension costs as motivation
When the economy was booming, San Francisco's pension liability was largely covered by investment returns. That is no longer the case. In 2010, the city is expected to have to contribute (according to different estimates) between $300 and $575 million to pension costs directly from its general operating budget. The amount of the required direct contribution from city coffers is expected to go as high as $600 million by 2015 if nothing changes. This pressure on the city's general operating budget from contributions to pensions means that there is less money available for all the other services provided by the city.
The overall cost of the pension system to San Francisco taxpayers tops $1.2 billion a year.
John Diaz of the San Francisco Chronicle, commenting in July on the Adachi pension reform measure, wrote:
- "But the crisis over escalating pension and health care costs that has been brewing for years - and ignored by all but a few lonely fiscal conservatives - has reached the breaking point...'This is like the dot-com bubble bursting,' said Susan Kennedy, chief of staff to Gov. Arnold Schwarzenegger."
Adachi says of his initiative, "This isn't an attack on labor. It's a math problem."
Meaning of a "yes" vote
According to election officials, voters who vote "yes" on Proposition B want to:
- Increase employee contributions to the Retirement System for retirement benefits,
- Decrease employer contributions to the Health Service System for health benefits for
employees, retirees and their dependents,
- Change rules for arbitration proceedings about City collective bargaining agreements, and
- Prohibit any increase in employee compensation for affected City employees for five years if a court invalidates any part of this measure.
Meaning of a "no" vote
According to election officials, voters who vote "no" on Proposition B want to leave the city's charter as is, and make none of the proposed changes to the city's pension system.
Adachi describes the pension reform initiative
Michael Moritz of Sequoia Capital and his wife, novelist Harriet Heyman, gave $245,000 to the campaign to enable it to collect the approximately 76,000 signatures that were submitted to qualify the measure for the ballot. Moritz, described as an "iconic Silicon Valley figure", was an early investor in Google, Yahoo and YouTube.
Investor Ronald Conway and David Crane, an advisor to Gov. Arnold Schwarzenegger have each given $10,000 to the ballot measure campaign.
Organized labor in San Francisco is up in arms about the Adachi measure. Tom O'Connor, president of San Francisco's firefighters union, says, "He's looking to kick city workers when they're down. City workers already have been giving back. The central problem with Adachi's measure is that he's not working with city employees to solve a problem, but demonizing them when the real problem is Wall Street."
Chris Daly, a member of the San Francisco Board of Supervisors, is reported (by the San Francisco Chronicle) to have threatened to introduce a motion to cut $1.2 million from the budget of the Office of the San Francisco Public Defender, possibly in retaliation for Adachi's initiative.
According to Randy Shaw, editor of BeyondChron, "This initiative will dominate San Francisco’s November ballot, and be framed by the national media as a litmus test for plans to cut local and state employee pensions across the country."
Path to the ballot
- SF Smart Reform
- Full text of the Adachi Initiative
- Meeting archives for approval of ballot language on Proposition B
- Fog City Journal, "Adachi Pension, Healthcare Reform Measure Qualifies for November Ballot", August 2, 2010
- "Local ballot measure campaigns reach the finish line", July 6, 2010
- San Francisco Chronicle, "On the Growing Movement for Pension Reform", July 11, 2010
- San Francisco Chronicle, "Pension petition deadline looms", June 28, 2010
- Bay Citizen, "SF Unions Sue to Halt Pension Measure", August 11, 2010
- KTVU, "Measure Would Force SF Workers To Pay Into Pension Fund", June 19, 2010
- San Francisco Chronicle, "Adachi makes enemies, sense with labor proposal", July 10, 2010
- Wall Street Journal, "San Francisco Budget Woes? Super VC Moritz To The Rescue", July 7, 2010
- BeyondChron, "Adachi Pension Measure Could Reshape National Politics", July 7, 2010
- San Francisco Appeal, "Adachi Taps Venture Capital, Slaps Labor With Delivery of 76k Signatures", July 6, 2010