Adachi Pushes New S.F. Pension Reform

MARCH 28, 2011

By DAVE ROBERTS

Jeff Adachi, San Francisco’s elected public defender, is a modern-day Don Quixote tilting at unionized windmills while singing “To Dream the Impossible Pension Reform Dream.” The self-described progressive dared to take on that city’s powerful unions last year with his pension and health care reform measure, Proposition B. It lost 57 percent to 43 percent after being savaged and distorted by a $2.5 million union ad campaign.

Having licked his wounds and learned a few lessons, Adachi is once again saddling up to launch a new reform effort that has been dubbed “Son of B.” It’s actually triplets named Charter Amendments 1, 2 and 3. They differ in their requirements, with CA 1 requiring city employees to contribute more to their pensions; while CA 2 and CA 3 also require the employees to contribute to their health care. He needs to collect 46,177 signatures by July 11, and will decide later which measure to take to the ballot.

The measures share the following reforms:

* Pension spiking is eliminated;

* Employees with higher salaries have to contribute a greater percentage;

* Pensions are capped at $140,000;

* The retirement age for public safety employees is extended to 57 from the current 55 (and extended to age 65 instead of 62 for all others);

* New employees receive reduced benefits.

Adachi, in a speech to the Contra Costa Taxpayers Association last week, discussed the need for reform, lessons from last year’s campaign and why he’s confident a reform measure will pass this November. He said:

In San Francisco now we spend almost a billion dollars — and we have a $6 billion budget — almost a billion dollars on pensions and benefits for our city employees: 26,000 city employees, 28,000 retirees and 47,000 dependents. We have a debt of $4.3 billion in unfunded health care liability. That comes out to about $36,000 per household.

Now if you had to write a check every month to a city employees retiree and benefits fund of $3,000 out of your household, you would get it right away; you would be on the corner with a sign. But most people don’t even notice; most people don’t even understand what pension reform is. It’s not like “Save the Redwoods” — everyone gets that in three words. But when people get it they are militant about it.

53 Militant Unions

Even more militant, however, are the city’s 53 employee unions — “a virtual army of folks,” said Adachi. Of his losing first campaign, he said:

It was quite a brutal campaign. Our campaign wasn’t as strong as it should have been. The unions hired the best. They managed to put on a campaign that essentially said we were attacking health care for kids. Because we would require 25 percent more for health care. I think tactically I made a mistake by trying to address both health care and pensions. Had it just been a pension measure it would have passed without question.

He was only able to raise $1 million for the pro-B campaign, an amount that he plans to double this time around. But in a city in which the average city employee makes $95,000 a year, the unions will no doubt have deeper pockets.

The need for reform is a no-brainer when you look at the budget numbers:

• • * This year San Francisco taxpayers are contributing $357 million to city employee pension costs. In four years, that amount is projected to reach $600 million.
  • * Most city employees contribute 7.5 percent of their salary toward the pension system while the city contributes 13.5 percent of salary. The city’s rate is projected to increase to 28 percent by 2015, while the employee rate remains the same.
  • * The $4.3 billion unfunded liability for health care is growing by $300 million per year and will reach $10 billion in 12 years. Meanwhile the city has only saved $9 million to cover this debt.
  • * This year San Francisco is facing a $379 million budget deficit, which is expected to increase next year.

Services Slashed

As a result, city services have been cut. Summer school was canceled last year for the first time; the park and recreation budget was slashed in half and $113 million was shaved off the school budget, representing a quarter of teachers and staff.

“So the reality is that we know what the problem is,” said Adachi. “The question is: Do we have the courage to forge a solution?”

Adachi has learned from the misleading anti-Measure B ad campaigns featuring employees unable to provide health care for their sick children. Now with the new reform measure he is counting on support for the graduated-contribution level based on income, which exempts employees making less than $50,000.

“During the campaign, they put fliers out saying this is going to hurt employees who make under $40,000,” he said. “That’s true, but there’s only 15 of them in San Francisco.”

Adachi hopes to shift the debate this time around from what is being taken from city employees to what is being taken from the other 94 percent of residents — the taxpayers — to support the current and retired workforces (many of whom don’t live in San Francisco), and how vital it is for the city’s fiscal survival that action be taken now.

The essential message that we will get across this time is that if we don’t act, even if we continue to contribute hundreds of millions of dollars from taxpayers to pension funds — and San Francisco has one of the better-funded programs in the country, which isn’t saying much — we will wind up with a one-in-three chance that we will not be able to pay our pension obligations by 2024.

And we’re much better off than most counties and most cities. This year alone there are an estimated 49 cities in the state that will probably either come close to declaring bankruptcy or will declare bankruptcy. Vallejo is no longer an isolated case. We will reach a point where we are not able to pay our health care cost.

It’s like that old Aesop fable about the ant and the grasshopper. If you sit there like the grasshopper and kick the can down the road and think everything will be fine, you will starve. We’ve seen that happen already in cities across the nation. Look at what’s happening in Illinois … where they are not able to pay their debts anymore.

Adachi said he sometimes feels like the character in a science fiction movie who warns that the world is about to end:

We don’t have to wait until five or 10 years from now of the aliens landing and taking over. It’s happening now. Our message is a positive one, and it has two parts. One part is that we need to save ourselves if we want to enjoy the quality of life that we have all come to enjoy. Oakland cut their police force by 20 percent. I can’t think of a worse place to cut a police force than Oakland. San Jose, they are laying off 20 to 25 percent of their firefighters. That’s crazy. That’s the first lesson: to save ourselves.

But the more compelling one is that we have got to save our children. We have to make sure that their future is secure. We have to make sure that the great educational and social institutions that we have are preserved. I really do believe it comes from the bottom up. We have to take a stand. We are forming an organization called California United so we can begin looking at how we can combine strategies and resources with other pension reform efforts all around the state. This time I know how to win.