City leaders playing unfair pension politics

San Francisco officials ought to be looking out for the best interests of The City’s taxpayers and assuring that hard-pressed public services remain well-funded, but instead, they are protecting city unions, particularly the police and fire, by engaging in some questionable political gamesmanship.

At issue are competing pension-reform initiatives sponsored by competing mayoral candidates. Public Defender Jeff Adachi, who has become a champion of pension reform because he believes pension costs will sap funds for government programs, was unsuccessful last year with Proposition B after unions exploited the measure’s health care reforms to frighten voters about losing health benefits. Adachi came back for this November’s election with another pension reform measure (Prop. D). Given shifting public attitudes, union supporters feared that this measure could actually pass — especially after Adachi stripped the more controversial health care elements out of it.

In response, Mayor Ed Lee and The City’s establishment are backing Prop. C, a pension-reform half-measure designed largely to blunt the more serious cutbacks included in the Adachi proposal. This measure, which caps increased pension contributions for high-wage workers, is backed by city unions, which gives you an idea of how serious it is. It’s fair enough to put a competing measure on the ballot, but it’s not fair the way the mayor and, according to critics, City Controller Ben Rosenfield have surreptitiously undermined the Adachi plan.

According to The San Francisco Examiner last month, “A deal … Lee struck weeks before announcing his run for a full term would shield police and firefighters from … Adachi’s pension-reform initiative. … A provision delaying implementation of the proposed Adachi measure is contained within a broader agreement Lee negotiated last month with police and fire unions to postpone scheduled pay raises to help balance a budget deficit.”

The interim mayor quietly negotiated a deal that exempts many of The City’s highest-compensated workers from the increased pension contribution requirements if the Adachi proposal is passed by voters.

This is undemocratic, an effort by City Hall to ignore the will of voters if they approve a measure the mayor doesn’t like. It also reduces the savings inherent in the Adachi pension reform measure, which provides campaign fodder for Lee’s preferred measure.

Rosenfield clearly gave Lee’s plan a boost. The comparative cost-savings numbers he came up with assumed that the Board of Supervisors will approve the memorandum of understanding that exempts police and fire unions from the provisions of Proposition D. The Board of Supervisors OK’d that deal Tuesday “without a peep,” as The San Francisco Examiner reported, but Rosenfield’s assumption meddled in politics.

Furthermore, Rosenfield assumed, in one scenario, that the pension fund would provide an unrealistic rate of return of 25 percent this year, which was seized upon by the Lee supporters to downplay the size of the pension debt. And Rosenfield analyzed the financial timeframe over 10 years for Prop. D. Because Adachi’s initiative includes the toughest reforms for new hires, few of those savings will be seen in 10 years, but significant savings will be realized over 25 years.

Rosenfield denied suggestions that he rigged the analysis. “It’s just not true,” he told me. “My charter obligation is to provide balanced information to San Francisco voters so they can make a fair choice.”

But Adachi complained that “All the ‘powers that be’ are doing everything they can to undermine [the Prop. D] reform.”

San Francisco voters should understand that pension reform that exempts the best-paid unions from many of the reforms is just window-dressing. San Francisco, like other cities throughout the country, has a large pension gap that must be closed. Without reasonable reforms, other services must be slashed. It’s too bad that the establishment would rather play games than fix a serious problem.

Nothing contained in this blog is to be construed as necessarily reflecting the views of the Pacific Research Institute or as an attempt to thwart or aid the passage of any legislation.

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