Pension costs skyrocket, reform necessary
San Francisco city employees, who have long planned on using their pensions to live out retirement in ease, may soon face grim circumstances. Unless the city seriously addresses comprehensive pension reform, city workers — particularly police officers — may find themselves unemployed.
As San Francisco’s rising deficit surpasses $300 million, it is obvious that soaring pension costs, which have risen $100 million each year, is one of the most challenging obstacles in reducing city debt.
The deficit has become so overwhelming that city officials are on the verge of closing local fire stations on a rotating basis and laying off 171 police officers. The budget problems are complex, but creating a sustainable pension system is one sensible way to lessen the burden.
Fortunately, three plans for pension reform may lead us out of the red. The three plans are the work of public defender Jeff Adachi, Mayor Ed Lee and a citizen-led labor coalition, respectively.
Though the plans all vary and are subject to change or even consolidation, they all have the same goal in mind: digging us out of our deficit.
Adachi’s proposal would incorporate a sliding scale so that employees making less than $50 thousand would not face any pension increases, but employees at the higher end of the income bracket would be required to pay more into the system. Lee’s proposal, on the other hand, would increase the pension payment of all employees by one flat percentage, though the exact figures are not yet known. Finally, the labor coalition’s proposal would gradually increase the pension payments by 2 to 4 percent a year.
All three measures are expected to save between $90 and $144 million each year. If reform does not pass, Lee said the city is likely to go bankrupt.
Each proposal would decrease the deficit, but Lee’s would place too much pressure on lower income workers. [X]press finds Adachi’s progressive measure more fitting of the city’s needs. Distributing the burden of pension reform based of income is far more pragmatic choice.
The present pension system is unsustainable because city employees are required to pay a fixed rate on their pension while the city’s costs are not fixed.
Without reform, more budget cuts will inevitably happen, and social programs, our education system, and our police and fire departments will all suffer.
If San Francisco does not fix the problem, the pension system’s costs will inexcusably continue accumulating to unbearable levels. During such tough economic times, the city cannot afford a bout of fiscal irresponsibility.