The Moment of Truth for San Francisco Pension Reform

Last month, we wrote about the competing pension reform proposals circulating around San Francisco. Generally speaking, we weren't impressed: a proposal from Mayor Ed Lee and a number of labor unions contained laudable ideas for limiting pension spiking and raising the retirement age, along with a marginal increase in employee contributions, and a competing plan from Public Defender Jeff Adachi would impose a sliding scale for employee contribution if pension investments perform poorly. But neither plan made any serious attempt to address the city's mammoth $4.4 billion in unfunded health care liabilities.

Well, we'll soon know if Lee, Adachi, and the unions took anyone's criticisms seriously: the San Francisco Chronicle reminds us today that Tuesday is the deadline for introducing a reform proposal if it's to make it onto a November ballot. City officials and labor leaders worked through the weekend to hammer out a plan that they can present to the City Council tomorrow, and rumors abounded that the SIEU was pulling out of the talks. The trick is for Lee and the unions to put together a plan that Adachi will support, in order to convince him not to put his own rival plan on the same ballot. Regardless, Lee's plan will still need six City Council votes before it gets to the ballot.

The Chronicle offers no details of what sorts of reform measures Lee is planning, but it's interesting that the unions are unhappy. It's probably too much to hope for, but now that Lee has decided not to run in the November mayoral race, one wonders if he feels free to actually take this problem seriously. And make no mistake, San Francisco's pension shortfall is a serious problem: the unfunded liability in SFERS sits at $6.8 billion, and the city hasn't saved a penny towards the health care obligations we mentioned earlier. And after the Fitch ratings agency downgraded its debt last month, the city can't expect to easily borrow its way out of that.