Proposition B - Retirement Benefits for Safety EmployeesNovember 1, 2003
What it does
The San Francisco City Charter details the retirement benefits of City employees, and any change to their retirement benefits has to be voted on by the citizenry as a Charter amendment. In the case of Prop. B, we are faced with a relatively technical change to the language that will allow a small number of “miscellaneous safety employees” of the City and also the City College District (which is a separate legal jurisdiction) to improve their retirement benefits.
Prop. B would allow the Board of Supervisors to agree to changes to the retirement benefits for these employees that involve an increased cost, so long as it is borne by the employees. This replaces the current language that mandates “no net increase in cost.”
This Charter amendment was placed on the ballot by the Board of Supervisors. The current number of City and City College employees who would be affected is 422.
Why it is on the ballot
The affected “miscellaneous safety employees” covered by this Charter amendment include probation officers, district attorney and public defender investigators, medical examiner investigators, juvenile court counselors, and others. These employees receive retirement benefits through the State of California Public Employees’ Retirement System (CalPERS) rather than the City’s system, which covers most employees. The Board of Supervisors must contract with CalPERS for the terms agreed on through collective bargaining.
Under Prop. B those employees would remain in CalPERS, but there would be greater flexibility in negotiating the terms of their compensation. (Prop. B would make no change in the contract with CalPERS.) Instead of the current language that requires “no increase in cost,” the new language would allow for “cost-neutral” agreements. For example, employees could trade lower current pay for higher retirement benefits.
- This charter amendment provides the flexibility needed for employees to improve their retirement benefits by giving up some current compensation. This is a reasonable thing for employees to ask for
- Since this flexibility is already available to sheriff’s deputies, the other group of San Francisco public employees covered under CalPERS, it is only fair that miscellaneous safety workers be granted that right
- The language of the charter amendment does not provide a meaningful check on future costs. The only basis for determining the “cost neutral” nature of the agreement is the contract under discussion. Labor contracts typically run no more than 4 years, but the additional retirement costs incurred will be funded over a much longer period. Thus, even if employees trade wages for better retirement benefits in one contract, there is no guarantee that for the remainder of the window during which the improvement is funded, wage costs will remain at a discounted level. Given everything we know about the way labor negotiations work in San Francisco, this measure is probably designed to increase the costs to the City—trading political gain in the short run for 30 years of City indebtedness
- In addition, support for this measure is based upon the assumption that the Board of Supervisors and Mayor should be empowered to negotiate significant changes in retirement benefits. This is the very principle the voters rejected, when they voted down Prop. E in November 1996, which would have allowed retirement benefit improvements to be made without voter approval. It makes no sense to exempt another small group of employees from this same principle
The “no net increase in cost” language has been difficult to implement from its inception. By definition, better benefits cost more; therefore, the language could be construed to prevent any retirement increases. The City has adopted a number of “tests” for applying this language, none of which have been particularly meaningful.The reality is that Prop. B would increase retirement benefit costs to the City. The new “cost neutral” language would mean that under a current labor contract, any increases in retirement benefits would have to be offset by decreases in current pay. But when a new labor contract is negotiated, the total package will increase, as it always does. Technically, whether the total package will be larger after this amendment than under the status quo depends on how future labor negotiations turn out. But Prop. B allows for these future labor negotiations to include a more explicit discussion of the tradeoff between current and future compensation.
While Prop. B will most likely lead to greater future costs, the existing system is already open to such growth. SPUR has always encouraged leaving specific benefits, including retirement benefits, to elected officials rather than sending them to the voters. Prop. B would provide appropriate flexibility for the Board of Supervisors in reaching agreement with this group of employees.
SPUR recommends a "Yes" vote on Proposition B.